MEMORANDUM AND ORDER ON MOTION FOR SUMMARY JUDGMENT
I.
On April 7, 1986, the debtor gave the defendant an unsecured $3,000,000.00 promissory note (the “1986 note”) and received a line of credit from the defendant for that amount. On that same date, the debtor and the defendant entered into a “Commercial Revolving Loan Agreement” which specified the terms under which the debtor could draw upon the line of credit. One condition was that if the debtor defaulted, it would grant the defendant a security interest in all of its property.
As of March 19, 1987, the debtor had drawn the entire $3,000,000.00 line of credit and was in default on the 1986 note. On same that date, the defendant waived existing defaults in exсhange for which the debtor gave the defendant a new $3,000,-000.00 note and a security interest in all of its property and agreed to pay accrued interest of $52,353.12. Defendant’s Exhibits 3, 4 and 5. The debtor also issued prefеrred stock to a group of investors in exchange for $1,500,000.00. The defendant claims that the investors would not have made this capital infusion if the 1986 note defaults had not been waived. The defendant subsequеntly perfected the security interest.
On November 16, 1987, the debtor filed a petition under chapter 11 of the Bankruptcy Code. On November 17, 1987, a cash collateral order entered which included аn acknowledgement by the debtor that the defendant had a valid, duly perfected, first priority security interest in all of the debt- or’s assets; granted the defendant a continuing first priority security interest in all of thе debtor’s assets; and provided that any successor to the debtor, including any trustee appointed, would be bound by the order. 1 The debtor subsequently paid the defendant the entire amount of the secured debt pursuant to the cash collateral orders.
On March 3, 1988, the plaintiff was appointed chapter 11 trustee. See 11 U.S.C. § 1104(a). On April 14, 1988, the trustee commenced the instant adversary proceeding under Code § 543(b), seeking an order requiring the defendant to turn over certain bank deposits. On September 30, 1988, the plaintiff filed an amended complaint adding six counts, two of which are at issue here: Count 2 — allеging that the March 19, 1987 transfer of the security interest was a fraudulent conveyance under Code § 548(a); and Count 3 — alleging that payments made by the debtor to the defendant within ninety days of the petition werе preferential under Code § 547(b). 2 On February 22, 1990, the de *20 fendant filed the instant motion for summary judgment on Counts 2 and 3.
The defendant argues that the debtor received value when it transferred the security interest to the defendant because the security interest secured an antecedent debt of $3,000,000.00; that whether the funds were advanced before, contemporaneously with, or after the granting of the security interest is irrelevant; and that because the security interest extended only up to the amount of the debt, it must be found as a matter of law that the debtor received reasonably equivalent value in exchange for the transfer of the security interest. The defendant further contends that because it was a secured creditor during the ninety days before the petition, it must be found as a matter of law that payments mаde to it by the debtor were not preferential. The defendant’s latter argument follows such cases as
Matter of Prescott,
The thrust of the plaintiff's response is that at the time of the transfer of the security interest, thе debtor already had the $3,000,000.00; and that since the questions of what the debtor received and the value of the security interest given by the debtor present questions of fact, the motion for summary judgment must be denied.
II.
It is apparent that if as a matter of law the transfer of the security interest to the defendant on March 19, 1987 was not a fraudulent conveyance, so that the defendant’s motion must be granted аs to Count 2, the defendant’s motion must also be granted as to Count 3, as the viability of that security interest would defeat the plaintiff's preferential transfer argument.
Rule 56(c) Fed.R.Civ.P., made applicable by Bаnkruptcy Rule 7056, provides:
[Summary judgment] shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.
In determining whether to grant summary judgment, “the judge's function is not himself to weigh the evidence and determine the truth of the matter but tо determine whether there is a genuine issue for trial.”
Anderson v. Liberty Lobby, Inc.,
Code § 548 provides:
(a) The trustee may avoid any transfer of an interest of the debtor in property, or any obligation incurred by the debtor, that was made or incurred on or within one year before the date of the filing of the petition, if the debtor voluntarily or involuntarily—
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(2)(A) received less than a reasonably equivalent value in exchange for such transfer or obligation; and
(B)(i) was insolvent on the date that such transfer was made or such obligation was incurred, or became insolvent as a result of such transfer or obligation....
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[d](2) In this section—
(A) “value” means property, or satisfaction or securing of a present оr antecedent debt of the debtor, but does not include an unperformed promise to furnish support to the debtor or to a relative of the debtor....
The issue of whether, as a matter of law, thе debtor received reasonably equivalent value presents two questions: (1) whether the $3,000,000.00 was loaned by the defendant in exchange for the security interest given by the debtor, and, if so, (2) whether the security interest was reasonably equivalent to the $3,000,000.00 loaned.
Under Code § 548(d)(2)(A) an antecedent debt constitutes value for the granting of a security interest.
Pereira v. Hope (In re 550 Les Mouches Fashions, Ltd.),
The evolving question then is whether the value of the security interest was, as a matter of law, $3,000,000.00 or less. It is generally a question of fact as to whether an exchangе is made for reasonably equivalent value.
E.g., Bundles v. Baker (Matter of Bundles),
If reasonably equivalent value were determined from the perspective of what is received by the transferee, the defendant might well be correct. However, as this court stated in
Meister v. Jamison (In re Jamison),
The foregoing conclusion is disposi-tive of the defendant’s motion under Count 3. See supra at 20.
III.
For the foregoing reasons, the defendant’s motion is denied, and IT IS SO ORDERED.
Notes
. Cash collateral orders with the same provisions entered on December 11 and 23, 1987, and January 12, February 4, and March 9, 1988.
. Code § 547(b) provides in part:
[T]he trustee may avoid any transfer of an interest of the debtor in property—
(1) to or for the benefit of a creditor;
*20 (2) for or on account of an antecedent dеbt owed by the debtor before such transfer was made;
(3) made while the debtor was insolvent;
(4) made—
(A)on or within 90 days before the date of the filing of the petition; ... and
(5) that enables such creditor to receive more than such creditor would receive if—
(A) the case were a case under chapter 7 of this title;
(B) the transfer had not been made; and
(C) such creditor received payment of such debt to the extent provided by the provisions of this title.
. It is worthy of note that under Connecticut law "a person gives 'value’ for rights if he acquirеs them ... as security for ... a preexisting claim.... ” Conn.Gen.Stat.Ann. § 42a-1-201(44)(b) (West 1990).
See also, e.g., Lowell v. First Nat’l Bank of Cape Code (In re Lowell),