Schoenmann v. Shankar

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1 Unless otherwise indicated, all chapter, section and rule
references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1330, and
to the Federal Rules of Bankruptcy Procedure, Rules 1001-9037, as
enacted and promulgated prior to the effective date of The
Bankruptcy Abuse Prevention and Consumer Protection Act of 2005,
Pub. L. 109-8, 119 Stat. 23.
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UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
In re 	) Bankruptcy Case
) No. 05-33880DMLS
PETER DEVENDRA SHANKAR, 	)
) Chapter 7
Debtor. 	)
___________________________________)
E. LYNN SCHOENMANN, 	) Adversary Proceeding
) No. 07-3047DM
Plaintiff, 	)
)
v. 	)
)
SAVITRI SHANKAR, 	)
)
Defendant. 	)
___________________________________)
MEMORANDUM DECISION
Plaintiff, E. Lynn Schoenmann, trustee for Debtor’s Chapter 7
bankruptcy estate (“Plaintiff”), filed a Complaint for Avoidance
of Unauthorized Pre-Petition Transfers and Recovery of Money,
pursuant to 11 U.S.C. § 547(b), 1 to avoid and recover a
preferential transfer made by Debtor, Peter Shankar (“Debtor”) to
Defendant, Savitri Shankar (“Defendant”). 	Defendant failed to
Signed and Filed: April 07, 2008
________________________________________
DENNIS MONTALI
U.S. Bankruptcy Judge
________________________________________
Entered on Docket
April 08, 2008
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 07-03047 Doc# 20 Filed: 04/07/08 Entered: 04/08/08 10:03:33 Page 1 of 5

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2 The following discussion constitutes the court’s findings
of fact and conclusions of law. 	Rule 7052 (incorporating by
reference Fed. R. Civ. P. 52(a)).
3 See section 101(31)(A)(I).
4 Plaintiff demonstrated the elements set forth in sections
547(b)(1), (2), (4) and (5) existed.
11 U.S.C. § 547(b) provides: Except as provided in subsection
(c) of this section, the trustee may avoid any transfer of an
interest of the debtor in property--
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provide initial disclosures, failed to respond to written
discovery requests, and did not appear at trial on March 10, 2008.
Despite the fact that Defendant failed to file an answer or appear
at trial, the court proceeded to conduct the trial as a prove-up
hearing. 	For the reasons set below, the court will award judgment
to Plaintiff on her Complaint.
I. 	DISCUSSION 2
Plaintiff’s evidence established the following events:
Debtor made a payment in the amount of $27,496.00 to Defendant’s
attorney on October 20, 2004, of which a total of $19,337.75 was
disbursed over three payments to Defendant, who is Debtor’s mother
and therefore an insider; 3 Debtor filed his voluntary petition on
October 7, 2005; Defendant was a creditor and the payment was made
on account of an antecedent debt; and the payment enabled
Defendant to receive more than she would have received in Debtor’s
Chapter 7 case had the particular payment not been made. 	Thus, at
the trial’s conclusion, the court was satisfied that Plaintiff
established the elements of an avoidable preferential transfer
under section 547(b), except for Debtor’s insolvency at the time
of the transfer, pursuant to subsection (b)(3). 4
Case: 07-03047 Doc# 20 Filed: 04/07/08 Entered: 04/08/08 10:03:33 Page 2 of 5

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(1) to or for the benefit of a creditor;
(2) for or on account of an antecedent debt owed by the
debtor before such transfer was made;
(3) made while the debtor was insolvent;
(4) made–
...
(B) between ninety days and one year before the
date of the filing of the petition, if such
creditor at the time of such transfer was an
insider; and
(5) that enables such creditor to receive more than such
creditor would receive if--
(A) the case were a case under chapter 7 of this
title;
(B)the transfer had not been made; and
(C) such creditor received payment of such debt to
the extent provided by the provisions of this
title.
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Therefore, Plaintiff was allowed to file supplemental
evidence by March 31, 2008, to prove Debtor’s insolvency at the
time of the transfer. 	On March 25, Plaintiff submitted a
declaration from the Debtor, along with other supporting evidence,
to prove Debtor’s insolvency.
In her supplement, Plaintiff demonstrated Debtor’s insolvency
at two relevant points in time. 	First, approximately six months
prior to the transfer, Debtor’s financial condition is reflected
in his Schedules of Assets and Debts, filed as part of his divorce
proceeding, which indicate non-exempt assets of $59,081.76 and
debts of $81,180.00 - rendering Debtor insolvent at that time.
Second, the information contained in Debtor’s bankruptcy schedules
and statement of financial affairs, filed just less than one year
after the transfer, and the statements made in his declaration,
establishes his insolvency at the time of petition. 	The evidence
indicates there to be no substantial changes in his assets or
liabilities between those two periods of time.
A court may apply the principles of retrojection and
Case: 07-03047 Doc# 20 Filed: 04/07/08 Entered: 04/08/08 10:03:33 Page 3 of 5

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projection to find that a debtor was insolvent at the time of the
transfer. 	Gillman v. Scientific Research Prods. Inc. of Del. (In
re Mama D’Angelo, Inc.), 55 F.3d 552 (10th Cir. 1995). 	See also
Foley v. Briden (In re Arrowhead Gardens, Inc.), 32 B.R. 296, 301
(Bankr. D. Mass. 1983) aff’d 776 F.2d 379 (1st Cir. 1985). 	Those
principles permit the use of insolvency evidence on a date before
and after the preference date as competent evidence to meet the
burden of proof on the issue of insolvency, absent any substantial
changes in the debtor’s assets or liabilities during the
intervening period. 	In re Mama D’Angelo, Inc., 55 F.3d at 554.
Under the established principles of retrojection and
projection, the court concludes that Plaintiff has proven Debtor
was indeed insolvent at the time of the transfer, and thus she is
entitled to a judgment against Defendant for avoidance and
recovery of the preferential transfer in the amount of $19,337.75,
pursuant to sections 547(b) and 550(a)(1).
II. 	CONCLUSION
For the reasons stated above, Plaintiff is entitled to
judgment on her Complaint for Avoidance of Unauthorized Pre-
Petition Transfers and Recovery of Money. 	Debtor’s payment to
Defendant was a preferential transfer, avoidable by Plaintiff
under section 547(b), and recoverable from Defendant under section
550(a)(1). 	Counsel for Plaintiff shall submit a separate judgment
consistent with this Memorandum Decision. 	Counsel must comply
with B.L.R. 9021-1.
*** END OF MEMORANDUM DECISION ***
Case: 07-03047 Doc# 20 Filed: 04/07/08 Entered: 04/08/08 10:03:33 Page 4 of 5

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COURT SERVICE LIST
E. Lynn Schoenmann, Trustee
800 Powell St.
San Francisco, CA 94108
Kristina Pollak, Esq.
Stromsheim and Associates
201 California St., Ste. 350
San Francisco, CA 94111
Savitri Shankar
2312 Elliott St.
San Mateo, CA 94403
K. Keith McAllister, Esq.
Law Offices of K. Keith McAllister
P.O. Box 864
Tiburon, CA 94920
United States Trustee
235 Pine St., Ste. 700
San Francisco, CA 94104
Case: 07-03047 Doc# 20 Filed: 04/07/08 Entered: 04/08/08 10:03:33 Page 5 of 5