A bankruptcy trustee exercising her or his avoidance powers under Chapter 5 of the Bankruptcy Code may seek to recover the avoidably transferred property (or its value) from “the initial transferee,” “the entity for whose benefit such transfer was made” and “any immediate or mediate transferee of such initial transferee.” Despite the authorization to seek recovery from multiple sources, “[t]he trustee is entitled to only a single satisfaction . . . .”
Is the singleness of the trustee’s satisfaction to be measured by the number of recovery transactions or the number of recovered dollars? The Second Circuit decided that issue last week.
The facts of the transfer are garden-variety--it happened to have been avoidable under Section 549 as a post-petition transfer, but the holding should be equally applicable to voidable preferences, fraudulent transfers and every other type of avoidable transfer. The trustee had obtained a partial recovery from one of his permissible targets and then turned his attention to another target. The second target argued that, by reason of his partial recovery from the first target, the trustee had exhausted his “single satisfaction.” Not so, wrote Judge Lynch:
Section 550(a) authorizes the Trustee to pursue recovery from all available sources until the full amount of unlawfully transferred Estate property is fully realized for the Estate’s creditors. [citations omitted] By recovering a portion of the [transferred property] from [his first target], the Trustee merely expedited the ultimate satisfaction of the claim for the benefit of the creditors.
It is significant to this blogger that the trustee’s first recovery transaction was a settlement. It is therefore clear that a trustee may pursue additional targets even if the partial recoveries from his earlier targets were, because the trustee settled with them, less than all he might otherwise have squeezed out of them by litigating.
 Bankruptcy Code § 550(a). All subsequent citations to a section are citations to sections of the Bankruptcy Code.
 § 550(d).
 Jones v. Brand Law Firm, P.A. (In re Belmonte), 2019 U.S. App. LEXIS 22173 *(2d Cir. July 25, 2019)(Lynch, J.).
 Id. at *7. While the holding is stated with admirable clarity, this blogger is disturbed by the use of “unlawfully” in this context. Although a voidable transfer may happen to also have been unlawful, it isn’t necessarily so by reason of its voidability, nor is unlawfulness arising under something other than Chapter 5 a requirement for voidability. Most voidable transfers are perfectly lawful.
 Id. at *3.