Issue link: https://mbozikis.ufcontent.com/i/1422521
125 8. Recovery of Avoided Amounts Although the avoidance powers described above permit a trustee or debtor-in-possession to undo certain transactions or obligations, they do not, in and of themselves, provide for the return of any property to the estate. Instead, this power is granted pursuant to Section 550 of the Bankruptcy Code. In particular, Section 550(a) grants the trustee the power to recover, for the benefit of the estate, the property transferred, or, if the court so orders, the value of such property, from the initial transferee of an avoided transfer, the entity for whose benefit such avoided transfer was made, or any immediate or mediate transferee of such initial transferee. 72 In Senior Transeastern Lenders v. Official Comm. Of Unsecured Creditors (In re TOUSA, Inc.), 680 F.3d 1298 (11th Cir. 2012), the Eleventh Circuit Court of Appeals held that an existing lender who was repaid from proceeds of new financing found to be a fraudulent conveyance was an entity for whose benefit the transfer was made and thus subject to the turnover request. The trustee, however, may not recover the property or value from an immediate or mediate transferee of an initial transferee if such immediate or mediate transferee takes the property for value, in good faith, and without knowledge of the voidability of the transfer avoided (a so-called "good faith transferee"). 11 U.S.C. § 550(b)(1). The trustee is also prohibited from recovering property from any immediate or mediate good faith transferee of such a good faith transferee under Section 550(b)(1). 11 U.S.C. § 550(b)(2). Certain types of transferees can assert different defenses to a trustee's action to recover property. First, it is important to note that the "good faith" defense described in Section 550(b) does not apply to an initial transferee. Only immediate and mediate transferees of the initial transferee can assert the "good faith" 72 However, a trustee can only recover the value of the property transferred; it cannot obtain multiple recoveries from initial and subsequent transferees. 11 U.S.C. § 550(d).