In re: BFW LIQUIDATION, LLC, Debtor.
BLUE BELL CREAMERIES, INC., Defendant-Appellant. WILLIAM S. KAYE, Trustee of the BFW Liquidating Trust, Plaintiff-Appellee, Date / Time Period Invoices / Deliveries from Blue Bell to the Debtor Payments the Debtor Made to Blue Bell Transfer from creditor to debtor Transfer from debtor to creditor
from the United States Bankruptcy Court for the Northern
District of Alabama No. 2:09-bk-00634-TOM11
MARTIN, JULIE CARNES, and GILMAN, [*] Circuit Judges.
CARNES, CIRCUIT JUDGE
Supermarkets, LLC ("the Debtor") filed for
bankruptcy under Chapter 11. In administering and ultimately
liquidating the bankruptcy estate, the Trustee filed an
adversary proceeding against Blue Bell Creameries, Inc.
("Blue Bell") to recover monies the Trustee
contended were owed by Blue Bell to the estate. Specifically,
the Trustee sought to recover from Blue Bell more than $500,
000 in a series of payments that Blue Bell had received from
the Debtor during the 90-day period preceding the
Debtor's bankruptcy filing. Each payment by the Debtor
was made for recent shipments of ice cream and other
merchandise that Blue Bell had delivered to the Debtor for
the latter to sell to the public.
Bell acknowledged that the payments it received from the
Debtor constituted preferences under 11 U.S.C. § 547(b),
 which meant
that absent a valid defense by Blue Bell, the Trustee would
be empowered to "avoid" those payments: that is,
require Blue Bell to repay the money it had earlier been paid
by the Debtor for goods it had actually delivered. Blue Bell
argued below that it had just such a defense. Specifically,
11 U.S.C. § 547(c)(4) prohibits "avoidance" by
the trustee to the extent the recipient of payments during
the preference period provided "new value" to the
debtor during that same period.
Blue Bell having provided new value to the Debtor here-lots
of ice cream products that the latter was able to sell to its
customers in its efforts to remain financially afloat-the
bankruptcy court concluded that it was bound by our precedent
to reject, in large part, Blue Bell's new-value defense.
Specifically, relying on Charisma Investment Company,
N.V. v. Airport Systems, Inc. (In re Jet Florida System,
Inc.), 841 F.2d 1082 (11th Cir. 1988), the bankruptcy
court held that Blue Bell was entitled to an offset against
its preference liability only to the extent that any new
value it extended to the Debtor "remained unpaid"
as of the date the bankruptcy petition was filed. Because
Blue Bell was paid for many of the products that it had
delivered, the bankruptcy court concluded that Jet
Florida System prevented Blue Bell from using the
new-value defense to defeat the Trustee's efforts to
"avoid" such payments. As a result, the court ruled
that Blue Bell had to return much of the money it had been
paid for the goods it provided the Debtor.
Bell appeals the bankruptcy court's decision. After
careful review, and with the benefit of oral argument, we
conclude that the language in Jet Florida System
relied on by the bankruptcy court was dictum and, as such, it
does not bind us. Construing § 547(c)(4) anew, we
conclude that it does not require new value to remain unpaid.
We therefore vacate the bankruptcy court's judgment and
remand for a new calculation of Blue Bell's preference
Debtor, Bruno's Supermarkets, LLC,  was a grocery-store chain
with more than 60 stores in Alabama and Florida. Blue Bell
sold ice cream and related products to the Debtor on credit.
The Debtor traditionally paid Blue Bell twice weekly, meaning
that, under that payment scheme, the Debtor remained current
as to the money it owed Blue Bell.
Debtor began suffering from liquidity problems, however, and
in August 2008, it hired an advisory firm to provide guidance
on cash-flow management. Absent immediate action, the Debtor
expected to run out of cash. On the advisory firm's
recommendation, the Debtor began writing checks to its
vendors, including Blue Bell, only once a week, not twice. It
also began "stretching," or delaying, payments,
which occasionally included cutting checks and then holding
those checks for a period of time. Under this new
"slow-pay" protocol, the Debtor would ultimately
pay Blue Bell for the products it had delivered, but it would
take longer to do so. This practice also resulted in Blue
Bell receiving payments at irregular intervals, particularly
during the 90 days immediately preceding the bankruptcy
November 7, 2008, and February 5, 2009,  the Debtor paid Blue Bell
a total of $563, 869.37 in 13 separate payments. At least
$250, 000 of that total was for products that Blue Bell had
delivered to the Debtor before November 7, 2008. During the
same time period-between November 7, 2008, and February 5,
2009-Blue Bell delivered $435, 705.65 worth of ice cream and
other merchandise to the Debtor's grocery stores. Blue
Bell delivered these products in relatively small batches on
an almost daily basis, making about 1, 700 separate
deliveries. These transactions are summarized in the
Date / Time Period
Invoices / Deliveries from Blue Bell to the
Payments the Debtor Made to Blue
Nov. 7, 2008 - Nov. 11, 2008
Nov. 12, 2008
Nov. 12, 2008 - Nov. 24, 2008
Nov. 25, 2008
Nov. 25, 2008 - Dec. 1, 2008
Dec. 2, 2008
Dec. 2, 2008 - Dec. 4, 2008
Dec. 5, 2008
Dec. 5, 2008 - Dec. 8, 2008
Dec. 9, 2008
Dec. 9, 2008 - Dec. 14, 2008
Dec. 15, 2008
Dec. 15, 2008 - Jan. 4, 2009
Jan. 5, 2009
Jan. 5, 2009
Jan. 6, 2009
Jan. 6, 2009 - Jan. 12, 2009
Jan. 13, 2009
Jan. 13, 2009 - Jan. 19, 2009
Jan. 20, 2009
Jan. 20, 2009 - Jan. 29, 2009
Jan. 30, 2009
Jan. 30, 2009
Jan. 30, 2009 - Feb. 2, 2009
Feb. 3, 2009
Feb. 3, 2009
Debtor filed a voluntary Chapter 11 bankruptcy petition on
February 5, 2009. On September 25, 2009, the bankruptcy court
confirmed the Debtor's Fourth Amended Plan of
Liquidation. Pursuant to the plan and confirmation order,
William Kaye ("the Trustee") was appointed the
liquidating trustee for the Debtor's bankruptcy estate.
Acting for the benefit of the bankruptcy estate, the Trustee
was responsible for enforcing any avoidance actions that
might lie against creditors of the Debtor.
January 2011, the Trustee brought this adversary proceeding
against Blue Bell seeking to avoid, as a preference, the
$563, 869.37 that the Debtor had paid to Blue Bell during the
90-day period prior to the filing of the bankruptcy petition:
that is, any payments made between November 7, 2008, and
February 5, 2009. Blue Bell and the Trustee eventually
stipulated that all of the elements of a preference claim
under 11 U.S.C. § 547(b) had been satisfied with respect
to each of the transfers making up the $563, 869.37. That is,
Blue Bell had received these monies during the preference
period and they were in payment of a prior debt.
Bell asserted two defenses to the Trustee's preference
claims: § 547(c)(2)'s ordinary-course-of-business
defense and § 547(c)(4)'s subsequent-new-value
defense. The bankruptcy court rejected Blue Bell's
invocation of the ordinary-course-of-business defense. Blue
Bell does not challenge that ruling on appeal.
respect to the subsequent-new-value defense, the bankruptcy
court concluded that Blue Bell was entitled to an offset
against its preference liability only to the extent that any
new value it extended to the Debtor during the preference
period "remained unpaid" as of the petition date.
The court relied on Jet Florida System, in which our
Court stated that § 547(c)(4) had "generally been
read to require . . . that the new value must remain
unpaid." See In re Jet Fla. Sys., Inc., 841
F.2d at 1083.
all new value for which the Debtor had paid, the bankruptcy
court concluded that the Trustee could avoid-that is, claw
back-$438, 496.47 of the $563, 869.37 transferred to Blue
Bell during the preference period. It reached this figure by
relying on the calculations of the Trustee's expert
witness, who had analyzed the Debtor's books and records
and traced each of the 13 payments made during the preference
period to the particular invoices those payments were
designated to cover. Any invoice the Debtor had paid was
excluded from the amount of new value that Blue Bell could
use to offset its preference liability. The bankruptcy court
entered judgment in favor of the Trustee and against Blue
Bell on December 20, 2016.
Bell filed a notice of appeal to the district court. Shortly
thereafter, Blue Bell and the Trustee jointly certified that
an immediate appeal of the bankruptcy court's order
directly to this Court would materially advance the progress
of the case.
Blue Bell then filed a petition for permission to appeal the
bankruptcy court's order directly to this Court. A panel
of this Court granted the petition, and we now turn to the
merits of Blue Bell's appeal.
Bell argues that the statement in Jet Florida System
indicating that new value must remain unpaid is dictum, and
that the statute does not set out any such requirement. The
Trustee argues that the statement at issue in Jet Florida
System constitutes precedent that we are bound to
follow. Even if that statement is dictum, however, the
Trustee contends that policy considerations nonetheless weigh
in favor of requiring new value to remain unpaid in order for
that new value to offset a defendant's preference
liability. The Trustee further argues, in the alternative,
that transfers avoidable as a preference under § 547(b),
and on no other ground, are "otherwise unavoidable"
under § 547(c)(4)(B) and, therefore, any new value paid
for with such transfers cannot offset a creditor's
Whether the Statement in Jet Florida System Indicating
that § 547(c)(4) Requires New Value to "Remain
Unpaid" Is Dictum
Definition of "Dictum"
is a term that has been variously defined as a statement that
neither constitutes the holding of a case, nor arises from a
part of the opinion that is necessary to the holding of the
case." Black v. United States, 373 F.3d 1140,
1144 (11th Cir. 2004) (citing Seminole Tribe of Fla. v.
Florida, 517 U.S. 44, 66-67 (1996), and United
States v. Hunter, 172 F.3d 1307, 1310 (11th Cir. 1999)
(Ed Carnes, J., concurring)). Whether a particular statement
constitutes a holding or dictum depends on the facts of the
case. See Edwards v. Prime, Inc., 602 F.3d 1276,
1298 (11th Cir. 2010) ("[R]egardless of what a court
says in its opinion, the decision can hold nothing beyond the
facts of that case."). If a statement is "not
necessary to the result the Court reached in the case,"
then that statement is dictum. See Hunter, 172 F.3d
at 1310 (Ed Carnes, J., concurring); see also United
States v. Caraballo-Martinez, 866 F.3d 1233, 1244 (11th
Cir. 2017) ("[D]icta is defined as those portions of an
opinion that are not necessary to deciding the case then
before us." (quoting United States v. Kaley,
579 F.3d 1246, 1253 n.10 (11th Cir. 2009))), cert.
denied, 138 S.Ct. 566 (2017).
is not binding on anyone for any purpose."
Edwards, 602 F.3d at 1298. Accordingly, if the
statement in Jet Florida System indicating that new
value must remain unpaid is dictum, then we are "free to
give . . . fresh consideration" to this question.
Great Lakes Dredge & Dock Co. v. Tanker Robert Watt
Miller, 957 F.2d 1575, 1578 (11th Cir. 1992).
Statement at Issue in Jet Florida System Is Dictum
547(c)(4), in pertinent part, prohibits the Trustee from
avoiding a transfer to a creditor (that is, requiring
reimbursement from the creditor) if, after the transfer, the
creditor gave new value to the debtor that was "not
secured by an otherwise unavoidable security interest"
and "on account of which new value the debtor did not
make an otherwise unavoidable transfer" to the creditor.
The statute makes no mention of any requirement that any new
value provided by a creditor remain unpaid. Nevertheless, in
Jet Florida System, we opined that § 547(c)(4)
"ha[d] generally been read to require: (1) that the
creditor must have extended the new value after receiving the
challenged payments, (2) that the new value must have been
unsecured, and (3) that the new value must remain
unpaid." In re Jet Fla. Sys., Inc., 841 F.2d at
1083. We relied on three bankruptcy court opinions as the
basis for this observation. Id. (citing
Waldschmidt v. Ranier (In re Fulghum Const. Corp.),
45 B.R. 112, 119 (Bankr. M.D. Tenn. 1984),
aff'd, 78 B.R. 146 (M.D. Tenn. 1987),
rev'd, 872 F.2d 739 (6th Cir. 1989); Keydata
Corp. v. Bos. Edison Co. (In re Keydata Corp.), 37 B.R.
324, 328 (Bankr. D. Mass. 1983); Pettigrew v. Tr. Co.
Bank (In re Bishop), 17 B.R. 180, 183 (Bankr. N.D.Ga.
Jet Florida System had sought to avoid, as a
preference, almost $12, 000 in rent for a warehouse that the
debtor had paid to the appellant during the preference
period, arguing that because the debtor had vacated the
premises before the beginning of the preference period, the
latter received no value from the rental premises. See
id. at 1082-83. The appellant argued that it was
nonetheless entitled to an offset against its preference
liability under § 547(c)(4) because, notwithstanding the
debtor's choice not to make use of the offer, the
appellant had continued to make the leased premises available
to the debtor, which in itself constituted the providing of
new value. The bankruptcy court found that the debtor had
indeed vacated the premises before the beginning of the
preference period. Id. at 1082, 1084. The district
court found no error in that finding and, as a result,
concluded that the appellant had not provided any new value
to the debtor. That being so, the court held that the
new-value defense was not applicable, and the appellant had
to give the money back to the bankruptcy estate. Id.
appeal, we agreed with the district court and held that,
absent any use of the leased premises by the debtor, simply
making the premises available to the debtor did not confer a
"material benefit" on the debtor sufficient to
constitute "new value." Id. at 1084. In
other words, the extent of our ruling was to hold that the
appellant had not provided any new value to the debtor
subsequent to his payment of almost $12, 000.
earlier recitation of the elements of § 547(c)(4)'s
new-value defense, however, we had noted that, in addition to
requiring the providing of new value subsequent to a
payment-the prong on which the appellant floundered-there
were two other elements: "that the new value must have
been unsecured" and "that the new value must remain
unpaid." Id. at 1083. Although we cited those
additional two elements, neither played any role in our
decision. Indeed, we noted that both elements had
"concededly been satisfied." Id.
this reason, our statement in Jet Florida System
indicating that new value must remain unpaid was dictum. This
purported requirement was never at issue in the case and it
played no role in our decision or reasoning. See
Black, 373 F.3d at 1144; Hunter, 172 F.3d at
1310 (Ed Carnes, J., concurring). Because our statement in
Jet Florida System indicating that § 547(c)(4)
requires new value to remain unpaid is dictum, we are
"free to give . . . fresh consideration" to the
question of whether § 547(c)(4) requires new value to
remain unpaid. See Great Lakes Dredge & Dock
Co., 957 F.2d at 1578. We do so now.
Whether § 547(c)(4) Requires New Value to Remain
analyzed the plain language of the statute, as well as the
history of its development, we hold that § 547(c)(4)
does not require new value to remain unpaid. As to the
Trustee's argument that policy considerations support its
interpretation, we disagree and conclude that policy
considerations strongly disfavor the Trustee's position.
We explain why.
Standard of Review and Analytical Framework
of statutory interpretation are reviewed de novo.
Bankston v. Then, 615 F.3d 1364, 1367 (11th Cir.
2010); see also Pollitzer v. Gebhardt, 860 F.3d
1334, 1338 (11th Cir. 2017) ("Interpretations of the
[Bankruptcy] Code are questions of law that we review de
novo."). "The starting point in statutory
interpretation is the language of the statute itself."
Bankston, 615 F.3d at 1367 (quoting Warshauer v.
Solis, 577 F.3d 1330, 1335 (11th Cir. 2009)). "If
the 'language at issue has a plain and unambiguous
meaning with regard to the particular dispute in the
case,' and 'the statutory scheme is coherent and
consistent,' the inquiry is over." Id.
(quoting Warshauer, 577 F.3d at 1335). "In
determining whether a statute is plain or ambiguous, we
consider 'the language itself, the specific context in
which that language is used, and the broader context of the
statute as a whole.'" Id. (quoting
Warshauer, 577 F.3d at 1335); see also
Robinson v. Shell Oil Co., 519 U.S. 337, 340-41
(1997). Statutory language is ambiguous if it is susceptible
to more than one reasonable interpretation. Med.
Transp. Mgmt. Corp. v. Comm'r of I.R.S., 506
F.3d 1364, 1368 (11th Cir. 2007).
The plain, unambiguous, language of § 547(c)(4) does not
require new value to remain unpaid
§ 547(b) of the Bankruptcy Code, a bankruptcy trustee
may avoid certain transfers that the debtor made to a
creditor within 90 days of the petition date. A transfer that meets the
requirements for avoidance under § 547(b) is called a
preference, and the trustee has the burden of proof on
whether any particular transfer meets those requirements.
See 11 U.S.C. § 547(g).
transfer is avoided under § 547(b), then the trustee may
recover the amount of the transfer from the creditor to whom
the transfer was made.See id. § 547(b) (providing
for avoidance of a preferential transfer); id.
§ 550(a) (providing for recovery of the amount of an
avoided preferential transfer). The creditor will then have
only an unsecured ...