Kox operates an electronics store as a sole proprietor.  On April 5, Kox was involuntarily petitioned into bankruptcy under the liquidation provisions of the Bankruptcy Code. On April 20, a trustee in bankruptcy was appointed and an order for relief was entered.  Kox’s nonexempt property has been converted to cash, which is available to satisfy the following claims and expenses as may be appropriate:
　　A. Lose, because there is no evidence that Kox was insolvent on April 4.
　　B. Prevail, because the transfer occurred within 90 days of the filing of the bankruptcy petition.
　　C. Prevail, because the financing statement was not filed on the day of delivery.
　　D. Lose, because the transfer was in fact a substantially contemporaneous exchange for new value given.
　　Answer:D
　　D is corrent. Under the Bankruptcy Code, a trustee has the power to set aside preferential transfers made by the debtor to creditors. Preferential transfers are those made for antecedent debts which enable the creditor to receive more than s/he would have otherwise received under the liquidation proceedings. One exception to the trustee’s power to avoid preferential transfers is when a security interest is given by the debtor to acquire property that is perfected within 10 days after such security interest attaches. This is called an enabling loan. Consequently, Noll’s transaction with Knox qualifies as an enabling loan and cannot be set aside by the trustee.
　　A is incorrect. The Bankruptcy Act presumes that the debtor is insolvent during the 90 days prior to the date the petition was filed. Thus, on April 4 Knox would have been presumed to be insolvent and the trustee would not have to provide evidence of insolvency.
　　B is incorrect. Not all transfers occurring within 90 days of the filing of the bankruptcy petition are preferential transfers. For example, transfers which involve contemporaneous exchange for new value given are not preferential transfers regardless of when they occur.
　　C is incorrect. The financing statement need not be filed on the day of delivery but must be filed within 10 days after the security interest attaches in order to qualify as an enabling loan and not be set aside as a preference. In this case, Noll filed within the 10-day period (the day after delivery) and, thus, the transaction qualifies as an exception to the trustee’s power to avoid preferential transfers.