Appeal from the United States District Court for the Central District of Illinois, Springfield Division. No. 86 C 3028-Richard H. Mills, Judge.
Harlington Wood Jr., and Michael A. Kanne, Circuit Judges, and Jesse E. Eschbach, Senior Circuit Judge.
MICHAEL A. KANNE, Circuit Judge.
Dan Wey forfeited his down payment on a Virgin Island hotel when he failed to pay the balance under the terms of a real estate contract. His trustee in bankruptcy sought to have the down payment set aside, characterizing it as a voidable preference under 11 U.S.C. § 547 or as a fraudulent transfer under 11 U.S.C. § 548. Finding that no "transfer" occurred, as required by these statutes, the bankruptcy court dismissed the complaint. The district court found that a transfer had occurred but affirmed the dismissal because the antecedent debt requirement of § 547(b) had not been satisfied. We find that no transfer occurred and affirm the dismissal of the complaint.
The essential facts in this case are not disputed. Dan Wey contracted to purchase the Limetree Beach Hotel on the island of St. Thomas in the U.S. Virgin Islands from William and Adelaide Willock for $5.2 million. Under the terms of the contract, Wey was to pay $520,000.00 as a 10% down payment on April 10, 1984, and the remaining balance of $4.6 million on September 30, 1984. The contract further provided that the down payment would be forfeited in the event of Wey's default.*fn1
Wey could not come up with the $4.6 million final payment needed for the purchase of the hotel and consequently forfeited the down payment. On October 29, 1984, an involuntary Chapter 7 bankruptcy petition was filed against Wey and he was adjudicated as bankrupt.
Robert Sullivan, Wey's trustee in bankruptcy, brought an adversary proceeding in bankruptcy court against the Willocks to set aside the contract forfeiture and their retention of the down payment.
The trustee argued that the forfeiture of the $520,000.00 down payment was a "transfer" for purposes of § 101(48) of the Bankruptcy Code.*fn2 Thus, he sought to characterize it as a voidable preference under 11 U.S.C. § 547 or as a fraudulent transfer under § 548. Cross motions for summary judgment were filed. The bankruptcy court first denied the trustee's motion and then dismissed the complaint, treating the defendants' request as a motion to dismiss. The bankruptcy court ruled that no rights were transferred when Wey defaulted on the contract and thus the transfer element required by both § 547 and § 548 had not been met.
The trustee then appealed to the United States District Court for the Central District of Illinois. Judge Mills affirmed the bankruptcy court's dismissal-although on different grounds. The district court determined that the contract forfeiture was a transfer, but ruled that the down payment was not avoidable because there was no "antecedent debt" as required by 11 U.S.C. § 547(b). The district court further found that the forfeiture of the down payment constituted consideration of reasonably equivalent value and therefore the trustee was also unsuccessful as to his § 548 claim.
The trustee doggedly appeals to this court, still seeking relief under §§ 547 and 548 of the Bankruptcy Code. We have jurisdiction pursuant to 11 U.S.C. § 158(d). The trustee asserts that because the Willocks ultimately had $520,000.00 more than they would have received in Chapter 7 bankruptcy, the forfeiture of the down payment must be viewed as a transfer and must be set aside pursuant to either 11 U.S.C. § 547 or § 548.*fn3
The trustee's § 547 claim contends that a transfer did occur and that Wey's September 30, 1984 default occurred within ninety days of the filing of the October 30, 1984, bankruptcy petition. Therefore, he argues that the down payment constituted a preferential transfer and may be avoided.
The trustee's § 548 fraudulent transfer claim asserts that he received less than a reasonably equivalent value in exchange for the ...