Midwest Holding # 7, LLC (“Midwest”) appeals from the order of the district court affirming the bankruptcy court’s denial of its motion for summary judgment and grant of summary judgment in favor of Appellee Paul H. Anderson (“Trustee”). Midwest argues that the bankruptcy and district courts erred in concluding that a lease termination payment made by Tanner Family, LLC (“Debtor”) to Midwest was “for or on account of an antecedent debt” and thus avoidable as a preferential transfer under 11 U.S.C. § 547(b)(2). For the reasons that follow, we AFFIRM.
I. BACKGROUND
The material facts in this case are not in dispute. In December 2002, Debtor and Midwest entered into a lease agreement whereby Debtor leased retail space from Midwest for a term of five years, the lease term to expire in March 2008. Pursuant to the lease, rent was due and payable on the first day of each calendar month. On 9 August 2005, Debtor and Midwest executed a Lease Termination Agreement whereby Debtor agreed to pay $87,172.50 in exchange for Midwest releasing Debtor from any further obligations under the lease. Debtor made the payment on or after 2 August 2005 and vacated the premises at the end of August 2005. Within ninety days of making the payment, Debtor filed a petition for Chapter 11 bankruptcy and Trustee was appointed.
1
On 24 January 2007, Trustee brought an adversary proceeding in bankruptcy court in the Northern District of Georgia seeking to avoid and recover the $87,172.50 payment as a preferential transfer under 11 U.S.C. § 547(b). On cross-motions for summary judgment, the only issue before the bankruptcy court was whether the lease termination payment was made for or on account of an antecedent debt under § 547(b)(2). The bankruptcy court found that it was, and granted summary judgment in favor of Trustee. The district court affirmed, finding that Debtor’s obligation to make future rental payments was a debt that was incurred on the date the parties entered into the lease agreement and thus was antecedent to the lease termination payment. It concluded that because payment of the $87,172.50 lease termination fee extinguished Debtor’s preexisting debt under the lease, it was a transfer made “for or on account of an antecedent debt” within the meaning of § 547(b).
See Midwest Holding
#
7, LLC v. Anderson,
II. DISCUSSION
We review
de novo
the bankruptcy court’s grant of summary judgment, applying the standards under Federal Rule of Civil Procedure 56, which permits summary judgment only where there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law.
See In re Celotex Corp.,
Section 547(b) of the Bankruptcy Code allows a bankruptcy trustee to “avoid any transfer of an interest of the debtor in property” that: (1) is “to or for the benefit of a creditor”; (2) is “for or on account of an antecedent debt owed by the debtor before such transfer was made”; (3) is “made while the debtor was insolvent”; (4) is made “on or within 90 days before the date of the filing of the petition”; and (5) “enables such creditor to receive more than such creditor would receive if the transfer had not been made.” 11 U.S.C. § 547(b). The trustee must prove each element in order to show that a transfer is avoidable as a preference under § 547(b).
See id.
§ 547(g);
In re Flooring Am., Inc.,
A debt is “antecedent” to the transfer sought to be avoided under § 547(b) if it is
pre-existing
or is incurred
before
the transfer.
See In re Bridge Information Sys., Inc.,
The Code does not expressly define when a debtor “incurs” a debt, however, the definitions of “debt” and “claim” are instructive. Under the Code, a “debt” is a “liability on a claim.” 11 U.S.C. § 101(12). A “claim,” in turn, is a “right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured.”
Id.
§ 101(5)(A). By making the terms “debt” and “claim” coextensive, Congress has “adopt[ed] [] the broadest possible definition of ‘debt.’ ”
Penn. Dep’t of Pub. Welfare v. Davenport,
At the moment the lease was signed, Midwest had an unmatured claim against Debtor to receive monthly rental payments for the duration of the five-year term and, because a “debt” covers both contingent and unmatured claims or liabilities, Debtor had at that time a corresponding obligation to make those payments that equaled a debt. The fact that Debtor’s liability matured only periodically as each month’s rent became due and payable — or, as Midwest argues, that Debtor’s obligation to pay rent was contingent upon the nonoccurrence of certain events, e.g., destruction of the premises or constructive conviction by the landlord' — does not mean that the debt was not incurred upon execution of the lease.
See In re Valles Mech. Indus., Inc.,
We therefore hold that the debt in this case was incurred upon the signing of the lease and thus was antecedent to the $87,172.50 transfer.
See Upstairs Gallery, Inc. v. Macklowe West Dev. Co., L.P.,
Midwest appeals the district court’s order affirming the bankruptcy court’s grant of summary judgment in favor of Trustee. We conclude that Debtor’s debt was incurred at the time the lease was executed in 2002. Inasmuch as the 2005 termination payment discharged Debtor’s obligations arising under the lease agreement, it constituted a transfer “for or on account of an antecedent debt.” Accordingly, the bankruptcy and district courts did not err as a matter of law in determining that the transfer was avoidable under § 547(b).
AFFIRMED.
Notes
. Debtor’s Chapter 11 petition was subsequently converted to a Chapter 7 proceeding on 27 July 2006.
. In support of its argument that the debt in this case arose incrementally on the first of each month, and therefore was not antecedent to the termination payment, appellant relies on several bankruptcy cases from other circuits in which courts have held that debt pursuant to a real estate lease is incurred periodically on the due dates prescribed by the lease, and not on the date the lease is signed.
See, e.g., In re White River Corp.,