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Note: Pending an appeal of ruling that it had received avoidable transfers, Enodis Corporation, a Creditor of the Bankrupt, Consolidated Industries Corporation, filed claims against the Bankruptcy Estate which were objected to by the Bankruptcy Trustee on the ground that the Estate had not been reimbursed for the avoidable transfers. Under applicable law, US Bankruptcy Code Chapter 11 U.S.C. § 502(d), the court must disallow "any claim of any entity from which property is recoverable . . . unless such entity or transferee has paid the amount [for which it is liable] . . . . The only way to avoid the operation of § 502(d) is to pay the amount due and nothing short of payment will do."

Arguing that it had posted a standby letter of credit in favor of Trustee, Creditor moved for allowance of its claim. The United States Bankruptcy Court for the Northern District of Indiana, Grant, J., granted Trustee's motion for summary judgment. The court ruled that "[a] letter of credit represents nothing more than a promise to pay and the prospect that payment will be made sometime in the future; it is not payment itself."

[JEB/bca]

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