Carvell v. Bank One, Lafayette, N.A. (In Re Carvell)

QUEENAN, Bankruptcy Judge.

Section 551 of the Bankruptcy Code states that there is “preserved for the benefit of the estate” any transfer avoided under the estate representative’s various avoidance powers, including the representative’s powers under section 544(a), the so-called “strong arm clause.” 11 U.S.C. § 551 (1994). This appeal presents the question whether such preservation grants the estate priority over other liens even though under state law the other liens have priority over the avoided lien. We hold it does not.

Linda M. Carvell (the “Debtor”), as debtor in possession, has…