Problem 112

The Bank had a perfected security interest in the inventory of the Epstein Bookstore, which owed the bank $20k. On March 1, the inventory was worth $8k. On May 28, when Epstein filed for bankruptcy, the inventory was worth $20k because the store had purchased several new shipments for cash in the interim.

What can the trustee do about the bank's claim? I received this question from a text book. The textbook states "do a" I have not changed anything.

Bank: Fully secured at Bankruptcy

Bank: under-secured 90-days prior to bankruptcy petition filing by $12k.

The court looks at both periods for after acquired property clause per 547(c)(5).

The trustee will only get the $8k? Am I correct?

Does it matter that the creditor's position improved ($8k to $20k)?