In re Bub, 528 B.R. 555

Debtor Keith Bub owned three Dodge Vipers prepetition; he had earlier transferred title to his infant son and then submitted DMV title-transfer applications back to himself shortly before filing Chapter 7. New title certificates issued in Debtor’s name prepetition.
Debtor had pledged the Vipers as collateral to Jaylyn Sales pursuant to a prepetition loan; Jaylyn Sales never perfected its security interest by noting liens on the certificates of title.
Jaylyn Sales arranged storage of the Viper with Triple G, which asserted a warehouseman’s lien and physically controlled the vehicle at the time of the petition.
Debtor filed Chapter 7 on November 22, 2011 and claimed federal exemptions in the Viper totaling $15,230.56 on Schedule C.
The Chapter 7 trustee located the Viper in storage, arranged its turnover from the storage facility to the auctioneer (without bringing a turnover adversary), and sold the Viper for $37,500. Trustee and Rockstone (major creditor) objected to Debtor’s claimed exemption.
The court found title was in the Debtor as of the petition date but held Debtor barred from exempting the Viper under 11 U.S.C. § 522(g) because the prepetition pledge and third‑party possession constituted a voluntary transfer and the trustee’s acts constituted a “recovery.”

Issue	Trustee/Rockstone Argument	Debtor Argument	Held
Was the Viper property of the estate on the petition date?	Debtor’s son held title; Viper not estate property.	Debtor had transferred title back prepetition; Viper was estate property.	Title transfer application and DMV issuance prepetition meant Debtor had legal title; Viper was estate property.
Does § 522(g) bar Debtor from exempting property the trustee recovered?	Debtor voluntarily pledged Viper and gave possession to Jaylyn Sales; trustee recovered possession, so exemption barred.	Trustee did not file turnover/avoidance suit; did not “recover” the asset, so § 522(g) inapplicable.	Transfer was voluntary; trustee’s non‑judicial acts to obtain possession qualified as a recovery; § 522(g) bars the exemption.
Is a transfer of possession to a creditor treated as a “transfer” under § 522(g)?	Yes; possession/ control are transfers under the statutory and legislative framework.	N/A (argument admitted transfer back of title).	Court adopts broad definition of transfer (includes possession/control); pledge and storage were transfers.
Must trustee commence an adversary proceeding or obtain court leave to effect a “recovery” under § 522(g)?	No; trustee need not commence formal litigation if actions effect reconveyance/possession.	Debtor insisted trustee took no formal action; thus no recovery.	Court follows authority holding formal proceeding not required; trustee’s actions were sufficient for recovery.

In re Floyd, 423 B.R. 579 (Bankr. M.D. Ga.) (trustee cannot receive property for estate except under avoidance powers)
Glass v. Hitt (In re Glass), 60 F.3d 565 (9th Cir.) (trustee need not commence formal adversary; threat or action causing reconveyance can constitute recovery)
Russell v. Kuhnel (In re Kuhnel), 495 F.3d 1177 (10th Cir.) (trustee’s efforts to secure lien release can constitute a recovery without formal adversary)
In re Ulrich, 203 B.R. 691 (Bankr. C.D. Ill.) (recovery may occur absent formal adversary)
In re Trevino, 96 B.R. 608 (Bankr. E.D.N.C.) (same: trustee’s non‑adversary actions can satisfy recovery requirement)