Rajala v. Langer (In Re Lodge America, Inc.)

MEMORANDUM OPINION 1

JOHN T. FLANNAGAN, Bankruptcy Judge.

Without court authority, the debtor-in-possession borrowed to pay its utilities and repaid the loan with estate funds. Section 549(a)(2)(B) avoids a postpetition transfer of estate property not authorized by the court or “under title 11.” 2 The lender argues that the loan was in the ordinary course of debtor’s business under § 364(a); therefore, the transfer was authorized “under title 11.” 3 Did § 364(a) authorize the transfer that repaid the loan?

The court answers in the negative and rules for the Chapter 7 trustee on his…