This case involves an attempt by Paul C. Nordberg, as trustee for the estate of Chase & Sanborn Corporation (“C & S”), to avoid a $500,000 transfer as a constructively fraudulent one. 1 According to Nord- *1197 berg, defendant Societe Generale was the initial transferee of the $500,000, which C & S wired into Colombian Coffee Corporation, Inc.’s (“Colombian Coffee”) Societe Generale account. Therefore, Nordberg argues that the bank should be forced to return the amount to the estate. 2
The United States Bankruptcy Court for the Southern District of Florida heard the case. The bankruptcy court assumed without deciding that the $500,000 transfer constituted a section 548 fraudulent conveyance.
In re Chase & Sanborn Corp.,
Nordberg appealed to the United States District Court for the Southern District of Florida. That court affirmed the bankruptcy court order in an opinion which adopted the bankruptcy court’s reasoning. Nord-berg then filed this appeal in our court. We find that the bankruptcy court was correct in concluding that Societe Generale was a commercial conduit, and we affirm.
I. BACKGROUND
Societe Generale is a French bank which has a branch office located in New York City. Colombian Coffee Corporation, Inc. (“Columbian Coffee”) had a demand deposit account with Societe Generale’s New York branch during the time in question. The activities that are at the center of the case before us involve this account.
A. The Clearing House System as it Relates to this Case
All checks drawn on accounts established with Societe Generale in New York must be processed through the New York Clearing House (“clearing house”) system. When a check drawn on a Societe Generale account arrives at the clearing house for payment, Citibank, Societe Generale’s clearing bank, pays the check and debits Societe Gene-rale’s account by that amount. Citibank does this automatically, without considering the status of the account on which the check is drawn. 3
If there are insufficient funds to cover a check drawn on the account, the payment of the check automatically creates an overdraft on paper. In reality, however, So-ciete Generale has taken no action regarding the check at this point. Societe Gene-rale actually has until noon of the following business day to inform the clearing house whether it will honor or return the check. 4 Societe Generale’s internal rules require account officers to reach a decision by 10 a.m., so that it can meet the clearing house’s noon deadline.
B. Societe Generale’s Procedure Regarding Colombian Coffee Overdrafts
Some Societe Generale accounts have special provisions that allow the account- *1198 holders to write checks for which there are insufficient funds. If such a check is presented to the bank, the bank will automatically honor it despite the overdraft it creates in the account. Colombian Coffee, however, did not have any such understanding with Societe Generale regarding its overdrafts. Instead, because Societe Generale was aware of Colombian Coffee’s financial difficulties, it monitored Colombian Coffee’s account quite closely. Whenever Societe Generale became aware of an overnight overdraft, it first called Colombian Coffee to make sure that they were depositing sufficient funds to cover the check. Colombian Coffee would tell So-ciete Generale how much money was on the way and which bank was sending the money. Societe Generale would then contact the bank, which would confirm the information by telex or by telephone. It was only after receiving a confirmation from the bank in question that Societe Generale would honor the check.
C. Facts
On November 29, 1982, a check for $1,747,403.00, drawn on Colombian Coffee’s account with Societe Generale and payable to Banco Popular Bogota (“Banco Popular”), arrived at the clearing house for payment. Payment of the check created an automatic overdraft of $1,033,135.07 in the Colombian Coffee account.
When Societe Generale learned of the overdraft, it presumably followed its customary procedure and checked with Colombian Coffee to find out whether they were depositing sufficient funds to cover the check. Colombian Coffee apparently informed the bank that two wire transfers were coming from Credit Lyonnais Panama —one for $500,000, and another for $700,-000. 5 A corporate assistant at Societe Generale prepared an internal advice indicating that the money was indeed being transferred into the Colombian Coffee account by Credit Lyonnais and recommending that, because of this transfer, the bank should honor the check.
At the time that Societe Generale honored the check, however, the wire transfer had not yet arrived at the bank. Thus, Societe Generale listed an overdraft in Colombian Coffee’s account from November 29 until November 30. 6 Societe Generale charged Colombian Coffee’s account for this overdraft for the day of November 29, at a rate of 12.25% per annum. The charge amounted to $351.51. Deposition of Richard Magid at 58.
A credit ticket recording the wire transfer indicates that Societe Generale received the funds from Credit Lyonnais shortly after 4:00 p.m. on November 30. The funds came from C & S’s account with Credit Lyonnaise. Approximately six months later, C & S filed for bankruptcy. Nordberg subsequently filed this suit against Societe Generale, seeking to avoid the $500,000 transfer as a fraudulent conveyance.
II. ANALYSIS
In order to recover the $500,000 from Societe Generale, Nordberg would have to establish two things. First, Nordberg would have to establish that there had been a section 548 fraudulent transfer. After making this showing, Nordberg would have to prove that Societe Generale is a party from whom he may seek recovery under section 550. Section 550 allows a trustee to recover the fraudulently transferred property from the initial transferee, the entity for whose benefit the transfer was made, or a subsequent transferee of the initial transferee. 11 U.S.C. § 550(a) (1982 & Supp. IV 1986).
The bankruptcy court assumed without deciding that Nordberg proved fraud. 7 We *1199 will also assume this point without deciding it, and will focus our analysis on the key issue in this case: the status of Societe Generale in the context of this transaction.
Before discussing the specifics of the case, however, we must deal with an important issue. In
In re Chase & Sanborn Corp.,
In
In re Chase & Sanborn Corp.,
a trustee in bankruptcy attempted to avoid a transfer as a fraudulent conveyance.
8
The issue which troubled our court was not whether the property went
to
the alleged transferee, but whether it came
from
the debtor, the alleged transferor. The debt- or corporation, already defunct, had been reopened just for the purpose of laundering the funds. The debtor reopened its account; another party deposited funds into the debtor’s account; the debtor gratuitously transferred the money to a third party; and, the debtor closed the account.
Id.
at 1179. Our court ruled that the trustee could not recover the funds because, “[ajlthough the debtor corporation had possession of the funds in controversy by virtue of the transfer to the account, the record demonstrates that the debtor corporation did not have sufficient control over the funds to warrant a finding that the funds were the debtor corporation’s property.”
Id.
at 1180. In so holding, our circuit applied the control test, previously used by other circuits in the context of avoidable preferences,
see
11 U.S.C. § 547 (1982 & Supp. IV 1986), to determine whether a debtor had possessed property allegedly recoverable under section 548. The test articulated by our court is a very flexible, pragmatic one; in deciding whether debtors had controlled property subsequently sought by their trustees, courts must “look beyond the particular transfers in question to the entire circumstance of the transactions.”
In re Chase & Sanborn Corp.,
The control test, then, as adopted by this circuit, simply requires courts to step back and evaluate a transaction in its entirety to make sure that their conclusions are logical and equitable. This approach is consistent with the equitable concepts underlying bankruptcy law.
See Bank of Marin v. England,
We are not creating new law, or even expanding on the existing doctrine. Bankruptcy courts considering the question of whether a defendant is an initial transferee have traditionally evaluated that defendant’s status in light of the entire transaction. And, in the past, courts have refused
*1200
to allow trustees to recover property from defendants who simply held the property as agents or conduits for one of the real parties to the transaction.
9
Had these courts employed an overly literal interpretation of section 548, they could have allowed the trustees to recover the funds from the defendants. Instead, they determined that, although technically the defendants had received the funds from the debtors and could be termed “initial transferees,” the defendants had never actually
controlled
the funds and therefore it would be inequitable to allow recovery against them.
See also In re Colombian Coffee Co., Inc.,
When trustees seek recovery of allegedly fraudulent conveyances from banks, the outcome of the cases turn on whether the banks actually controlled the funds or merely served as conduits, holding money that was in fact controlled by either the transferor or the real transferee. Thus, where a bank receives money from a debtor to pay off a debt owed to the bank, courts have found that the bank gained control of the funds and have allowed recovery against the bank.
E.g., Matter of Prescott,
We now consider the issue in light of the facts of this case. Citibank’s automatic payment of the Colombian Coffee check on November 29 created an overdraft on paper. Societe Generale’s decision to honor the check on November 30 extended the period of time during which that overdraft existed until the next day. Overdrafts have traditionally been considered debts. Hersbergen,
Banking Law,
44 La. L.Rev. 247, 261 n. 86 (1983);
see Matter of Prescott,
The bankruptcy court in the instant case concluded that the transaction at issue did not create a real debt. The court found it “more realistic to view this transaction ... as being simultaneous.... If they were simultaneous, the bank never became any kind of transferee of this debtor under any view of § 550.”
Chase & Sanborn,
In addition to the fact that the transaction was virtually simultaneous, we find it significant that Societe Generale only honored the check because it knew with absolute certainty that Credit Lyonnaise had wired enough money to cover the check.
12
Thus, the bank did not honor the check “in the faith that the next day or two’s deposits would right the balance.”
Matter of Prescott,
Societe Generale did charge Colombian Coffee interest for the day of November 29. According to Societe Generale, however, the charge reflected the costs incurred due to the paper overdraft created when Citibank debited the Societe Generale account. This occurred before Societe Generale had decided whether or not to honor the check and, the bank declares, would have been charged regardless of whether it had decided to honor or bounce the check the following day. We find this explanation persuasive. Charges for handling such administrative matters are routine. The fact that a charge was made is not significant enough to warrant a finding that the bankruptcy court’s assessment of the transaction was erroneous.
III. POLICY CONSIDERATIONS
Fraudulent conveyance law necessarily takes competing interests into account. Trustees are allowed to avoid certain transfers as fraudulent because these transfers harm the creditors of the bank.
In re Chase & Sanborn Corp.,
It is especially inequitable to hold conduits liable in situations in which the conduits cannot always ascertain the identity of the transferror.
See In re Auto-Pak, Inc.,
IV. CONCLUSION
As the Supreme Court has noted in another context, “[t]his system could easily fall of its own weight if courts or scholars become obsessed with hair-splitting distinctions” and lose sight of the real purpose of the laws being applied.
United States v. Bailey,
AFFIRMED.
Notes
. According to 11 U.S.C. § 548(a)(2) (1982 & Supp. IV 1986), a transfer made within one year before the filing of the bankruptcy petition is constructively fraudulent if (1) the debtor transferred the property when the debtor was either insolvent or had reason to believe that the trans *1197 fer would cause or hasten insolvency; and (2) the debtor did not receive "reasonably equivalent value” for the transfer. A trustee need not prove fraudulent intent for the purposes of this section. See Ayer, How to Think About Bankruptcy Ethics, 60 Am.Bankr.LJ. 355, 371-72 (1986) (motive for avoiding fraudulent transfers rests more and more completely on notions of fairness to creditors, and less and less on notions of wrongdoing).
.See 11 U.S.C. § 550 (1982 & Supp. IV 1986) (listing parties against whom a trustee may recover property once the trustee establishes a section 548 fraudulent conveyance). Nordberg did not proceed against Colombian Coffee Corporation, Inc. ("Colombian Coffee”), against whom recovery may have been possible, because Colombian Coffee is also insolvent. See Appellant’s Brief at 3 note *.
. The only exceptions to this rule arise when the check is facially deficient — for example, when the check has not been signed.
. These are the only two choices a bank has; it cannot, for example, put off its decision until the following day.
. The |700,000 transfer is not at issue in the case before us.
. The records do not indicate exactly what time the overdraft was removed from the account.
. By not deciding whether section 548 had been satisfied, the court sidestepped the question of reasonably equivalent value. Under the code, the debtor can only avoid a transfer in those cases in which the debtor did not receive equivalent value for the property transferred. See 11 U.S.C. § 548(a)(2) (1982 & Supp. IV 1986).
In the case at hand, C & S wired $500,000 into Colombian Coffee’s account although C & S did not owe money to any of the parties involved in
*1199
the transaction. On the surface, then, the transfer seems to have been made for less than equivalent value.
Cf. Durrett v. Washington Natl. Ins. Co.,
When one looks beyond the surface, however, the situation becomes more complicated. For, C & S and Colombian Coffee were both owned by Alberto Duque Rodriguez.
See In re Colombian Coffee Co., Inc.,
. The trustee and debtor involved in that case were the same as those involved in this one.
.See, e.g., Coffee II, 75
B.R. at 178-79 (funds sent to defendant bank to deposit in third party's account);
In re Black & Geddes, Inc.,
. In the case before us, the bankruptcy court wrote a thoughtful order which also implicitly applied a control analysis.
. In
Bonded,
the court decided that the bank was a subsequent rather than initial transferee.
See Bonded,
. According to a former officer of Societe Generale, a transferor bank’s confirmation virtually guarantees that the funds are forthcoming. Deposition of Warren Schad at 154.