Barry Darsow is out of a job. He worked for the World Wrestling Federation (WWF) for 6 years. His latest wrestling character was named “The Repo Man.” During a recently filmed – staged – segment on Saturday Night Main Event, Barry mistakenly repossessed the wrong automobile. As a result, the WWF was sued for conversion. The company’s executives were furious and immediately terminated Barry’s employment contract for cause. Determined to make good on his WWF folly and prove himself as a skilled automobile recovery technician, Barry opened up his own repossession business.

With the help of Barry’s long-time friends Ric Flair, Arn and Ole Anderson, Tully Blanchard, and Mr. Fuji, they opened up a general partnership called “Demolition Stables.” This company specialized in repossessing and storing cars with substantially below-market value. All 6 men were general partners. Business was going well for Demolition Stables, however Barry was in a financial bind at home. He took out a $100K unsecured loan from Demolition Stables on February 1st. On April 1st, Barry wrote a check to Demolition Stables for $10,000 as a start to paying back his debt. Barry was insolvent at this point. All of the assets of the business were encumbered by a variety of loans.

Barry managed to make ends meet until August 1st, at which time he filed a petition in bankruptcy. Can the bankruptcy trustee avoid the $10,000 transfer as a “preference?”

A) Yes, because the transfer enabled Demolition Stables to recover more than it would have in a Chapter 7 liquidation.

B) No, because Barry is a general partner in “Demolition Stables”

C) No, because the transfer occurred more than 90 days prior to bankruptcy.

D) Yes, because general partners can only borrow money from their partnership secured by their share of the company.