874 F.2d 1186 (7th Cir. 1989)
In 1980 V.N. Deprizio Construction Co. was awarded contracts to do $13.4 million of work on the extension of Chicago's subway system to O'Hare Airport.1 By 1982 the company was in financial trouble.2 Because Mayor Byrne wanted the line open before the primary election for that office in February 1983, the City made the firm extraordinary loans of $2.5 million; the firm in turn donated $3,000 to the Mayor's campaign fund.3 In April 1983 Deprizio Co. filed a petition under the Bankruptcy Code of 1978.4
Richard N. Deprizio served as the firm's president.5 His brothers Robert and Edward also functioned as insiders of the firm.6 Deprizio Co. had borrowed money from many sources other than the City of Chicago, including Ingersoll Rand Financial Corp., CIT Group/Equipment Financing, Inc., and Melrose Park Bank & Trust.7 Richard Deprizio co-signed the note to the Bank.8 Richard and his brothers, Robert and Edward, all insiders of the firm, also guaranteed its debts to other lenders.9 Deprizio Co. was party to collective bargaining agreements calling for payments to pension and welfare plans.10 When it fell behind in making the required payments, the firm executed notes in favor of the plans, secured by junior interests in equipment in which Ingersoll and CIT held senior interests.11 Richard Deprizio co-signed the notes to several plans.12 The Central States Pension and Welfare Funds received only notes and security interests, from Deprizio Co.; no insider guaranteed these notes.13
Then there were tax obligations.14 Employers must remit to the government taxes withheld from wages.15 The Trustee believes that Deprizio Co. fell behind in making these payments but made substantial payments of delinquent withholding taxes in the year before bankruptcy.16 The United States, on the other hand, believes that Deprizio Co. did not remit any overdue taxes during the year before it filed its petition in bankruptcy.17 As the investigation continued and Deprizio's indictment was imminent, word circulated that he might "sing".18 So in January 1986 Deprizio was lured to a vacant parking lot, where an assassin's gun and the obligations of a lifetime were discharged together.19 The Trustee filed adversary proceedings against the lenders, the pension and welfare funds, and the United States — none of them insiders — seeking to recover payments made more than 90 days but within the year before the filing.20
Without deciding whether any of the payments was preferential within the meaning of § 547 or worked to the benefit of any insider, the bankruptcy judge denied the Trustee's request.21 On an interlocutory appeal to the district court, Judge Plunkett reversed.22 The district court remanded the case so that the bankruptcy court could determine whether the payments identified by the Trustee occurred, whether an insider received a benefit from any particular payment, and whether any of them was protected by § 547(c).23 Judge Plunkett certified the question under 28 U.S.C. § 1292(b), and we granted leave to appeal.24
Whether payments made by a debtor to outside creditors more than 90 days but within one year before bankruptcy filing are subject to recovery when those payments benefit insiders?25
Yes. Deprizio Co. made payments to outside creditors that reduced the exposure of inside guarantors.28 The Code treats such a payment as a single transfer avoidable under the one-year period when it benefits an insider.29 Section 550(a) allows recovery from the outside creditor.30 The bankruptcy court had denied recovery by treating each payment as two transfers, but the district court correctly reversed that approach.31
Payments to outside creditors that benefit insiders are subject to the one-year recovery period and may be recovered from the outside creditors.32
Whether an insider who may face personal liability under 26 U.S.C. § 6672(a) for a firm's unpaid withholding taxes holds a contingent claim against the debtor and therefore qualifies as a creditor?33
No. Deprizio Co. was required to remit taxes withheld from wages.36 The Trustee believes that Deprizio Co. fell behind in making these payments but made substantial payments of delinquent withholding taxes in the year before bankruptcy. Section 6672(a) creates personal liability for willful failure to pay over taxes but does not authorize the responsible person to recover from the firm.37 Because the insider therefore holds no contingent claim, the insider is not a creditor.38
An insider potentially liable under § 6672(a) does not qualify as a creditor, so the Trustee may not recover tax payments made more than ninety days before filing.39
Whether an insider qualifies as a creditor with respect to a firm's pension and welfare plan obligations under ERISA when the insider has not made a contractual commitment enforceable under the plan or agreement?40
No. Deprizio Co. fell behind on contributions to pension and welfare plans and executed notes secured by junior interests in equipment, with Richard Deprizio co-signing notes to several plans.43 The Central States Pension and Welfare Funds received only notes and security interests without any insider guarantee.44 ERISA contains no provision comparable to § 6672(a) that automatically imposes personal liability on insiders.45 Because the plans may enforce only the written agreements and because no insider guaranteed the Central States obligations, payments to those funds did not benefit an inside creditor.
An insider without a contractual commitment enforceable under ERISA or a veil-piercing finding does not qualify as a creditor, so the Trustee may not recover payments made more than ninety days before filing except where contractual guarantees exist.46
Whether a single payment by the debtor to an outside creditor constitutes one transfer or multiple separate transfers when the payment also benefits an inside guarantor or co-signer?47
Yes. Deprizio Co. made payments to outside lenders that reduced the contingent liability of inside guarantors.50 The Code equates transfer with the debtor's disposition of property, not with each recipient's benefit.51 A single payment therefore is one transfer even though multiple parties gain.52 Section 550(a) then authorizes the trustee to recover that transfer from the initial transferee or from the insider beneficiary.53
A single payment constitutes one transfer that may be recovered from the outside creditor when it benefits an insider.54