The court of appeals reversed a judgment of the Bankruptcy Appellate Panel (BAP) and remanded. The court held that when a bankruptcy court permits the trustee recovery after the court has avoided a preferential transfer, the court has discretion to award the trustee either recovery of the property transferred or the value of the property transferred, even when the transferred property is a lien.
David and Linda Taylor bought a Toyota Camry shortly before declaring bankruptcy. They gave their lender, USAA Federal Saving Bank, a security interest in the car as collateral for a loan of $18,020. USAA perfected its security interest 21 days after the Taylors purchased the car. The perfection was timely under Idaho state law but one day late under federal bankruptcy provisions.
