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In re Pysz

Section 547(b) of the United States Bankruptcy Code contains what is known as the preferential-payment rule. That statute states that if a debtor transfers an interest in property to a creditor within the ninety days before filing bankruptcy, the bankruptcy trustee may avoid the transfer and recover the interest. In In re Pysz, the court considered whether a bankruptcy trustee may also avoid a judicial lien under the statute.

Andrew Pysz failed to pay for professional services rendered by James Hawkins. Hawkins obtained a judgment and judicial lien against Pysz. The lien attached to logging equipment and property owned by Pysz, and Hawkins properly recorded the lien.

Less than 90 days later, Pysz filed a petition for chapter-13 bankruptcy before the United States Bankruptcy Court for the District of New Hampshire. The bankruptcy trustee then moved for summary judgment, seeking to avoid Hawkins' judicial lien having preference over other creditors’ interests pursuant to Section 547(b).

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