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Click here for the full text of this decision FACTS:Ramba Inc. was in the oilfield services business. It purchased supplies, including drilling mud, from the appellee, Baker Hughes Oilfield Operations Inc., and resold the products to its customers. In August 2000, various creditors brought an involuntary bankruptcy proceeding against Ramba in the Bankruptcy Court for the Southern District of Texas. On Sept. 8, 2000, Baker Hughes joined the case as a petitioning creditor. The petitioning creditors reached an agreement with Ramba, under which Ramba would pay off its debts and the creditors would move to dismiss the bankruptcy petition. Ramba issued checks to all three petitioning creditors, including one to Baker Hughes in the amount of $85,654.85. The proposed settlement was then submitted to the bankruptcy court. In reviewing the agreement, the bankruptcy court noted that Ramba was engaged in an effort to sell its Drilling Fluids Division, and that the pending petition was preventing Ramba from attracting a buyer. The bankruptcy court found that the sale would be in the best interest of unsecured creditors, approved the proposed settlement, and dismissed the petition on Sept. 12, 2000. Soon thereafter, Ramba sold its Drilling Fluids Division for, among other things, the assumption of $12 million in trade debt. Unfortunately, the sale and accompanying removal of debt were not enough to stave off insolvency. In November 2000, Ramba filed a voluntary Chapter 7 bankruptcy petition. Lowell T. Cage was appointed as Ramba’s bankruptcy trustee. In April 2002, the trustee brought this action to avoid various pre-petition transfers � including the $85,654.85 payment to Baker Hughes � pursuant to 11 U.S.C. 547. Before the bankruptcy court, the trustee contended that the payment was a preferential transfer, and thus avoidable under 547(b). Baker Hughes responded that, in fact, the payment was a “contemporaneous exchange for new value” � the new value being the dismissal of the involuntary petition, resulting in the sale of the Drilling Fluids Division � and was therefore not avoidable. The bankruptcy court granted summary judgment for the trustee and avoided the transfer. The district court reversed and ordered that the trustee take nothing. HOLDING:The court reverses the judgment of the district court and renders judgment for the trustee. The “antecedent debt” requirement of 547(b)(2) and the “contemporaneous exchange” exception of 547(c)(1) � although often treated as opposite sides of the same coin � present two analytically separate inquiries. The former is an element of avoidability; the latter is an exception � that is, an affirmative defense � to avoidability. It is therefore possible that a given transaction might be one or the other, neither, or both. Baker Hughes contends that, upon joining the involuntary bankruptcy proceeding, its claim, “although originally based on the underlying debt for drilling mud, became something different”. Baker Hughes’ argument conflates the “antecedent debt” requirement of 547(b)(2) with the “contemporaneous exchange” exception of 547(c)(1). The possibility that the latter might apply in this case does not affect the analysis of the former. Whatever else Ramba’s transfer might be, it was unquestionably made “on account of an antecedent debt”, and that is all that 547(b)(2) requires. Baker Hughes argues that, although Ramba’s transfer was made in payment of an antecedent debt, it was also a “contemporaneous exchange for new value”, and thus subject to the exception to avoidability set forth in 547(c)(1). Of the five categories of “new value” set forth in 547(a)(2), there is only one possible fit: “release by a transferee of property previously transferred to such transferee.” Baker Hughes’ release of property is meaningless for purposes of 547(a)(2), unless the released property had been “previously transferred” to Baker Hughes. Although it is certainly true that commencement of an involuntary bankruptcy proceeding “creates an estate” consisting of most of the debtor’s assets, see 11 U.S.C. 541(a), the accompanying transfer of the property of the debtor (Ramba) is to the estate itself, not to the debtor’s creditor (Baker Hughes). Thus, because the property in the bankruptcy estate had never been transferred to Baker Hughes, Baker Hughes is not a “transferee”, and accordingly, its agreement to dismiss the petition was not a “release . . . of property”, as described in 547(a)(2). As an alternative basis for its judgment, the district court also held that Baker Hughes was entitled to summary judgment because it held a statutory lien on Ramba’s property at the time of the transfer. It appears to the court that the basis for this holding is 11 U.S.C. 547(c)(6), which prevents a trustee from avoiding any transfer “that is the fixing of a statutory lien.” Because the transfer in this case did not involve the fastening of liability pursuant to a perfected security interest � i.e., fixing of a lien � the district court erred in holding that the exception to avoidability found in 547(c)(6) applies. The district court clearly erred in finding that Baker Hughes held a statutory lien on Ramba’s property, the court concludes. Thus, Baker Hughes’s contention that the trustee has failed to satisfy the avoidability requirement of 547(b)(5) is without merit. The district court erred in holding that questions of material fact were raised by Baker Hughes regarding the insolvency requirement of 547(b)(3), the court concludes. OPINION:E. Grady Jolly, J.; Jolly, Smith and DeMoss, JJ.

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