United States Court of Appeals for the Ninth Circuit
59 F.3d 969 (1995)
In connection with financing obtained from a syndicate of banks and insurance companies (Syndicate), Powerine Oil Co. (Powerine) entered into a security agreement whereby its assets would serve as collateral for all letters of credit issued by a Syndicate member. Powerine bought crude oil from Koch Oil Company (Koch) (defendant), which was named as a beneficiary of two letters of credit issued by First National Bank of Chicago (First National), a Syndicate member. The letters of credit totaled $8.7 million, which exceeded Koch’s sales to Powerine. In the spring of 1984, Powerine made a $3.2 million overdue payment to Koch. Within 90 days, Powerine filed a Chapter 11 bankruptcy petition. The Committee of Creditors Holding Unsecured Claims (the Committee) (plaintiff) sought to recover the $3.2 million payment from Koch. By the time the action was filed, the First National letters of credit had expired. Moreover, the letters were undersecured because of Powerine’s insolvency. The unsecured creditors of Powerine, of which Koch was a member, could expect a recovery in the bankruptcy of far less than 100 cents on the dollar. The bankruptcy court granted Koch’s motion for summary judgment, allowing it to keep the $3.2 million payment on the grounds that it was a “contemporaneous exchange for new value,” an exception to avoidance set forth at 11 U.S.C. § 547(c)(1). The Bankruptcy Appellate Panel (BAP) affirmed on an equitable basis, concluding that avoidance of the transaction would be unfair to Koch because Koch would have received full payment, pursuant to the letters of credit, had Powerine defaulted rather than paid late. The Committee appealed.
Rule of Law
Holding and Reasoning (Kozinski, J.)
Dissent (Farris, J.)
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 97,000 law students since 2011. Some law schools—such as Yale, Vanderbilt, Berkeley, and the University of Illinois—even subscribe directly to Quimbee for all their law students. Read our student testimonials.
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students. Read more about Quimbee.
Here's why 240,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 14,200 briefs, keyed to 189 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.