November 23, 2020 Articles

When Can a Preference Action Brought under Federal Law Reverse a State Law Tax Foreclosure Sale?

Synopsis and implications of the Third Circuit’s decision in Hackler.

By Bob L. Olson and Benjamin W. Reeves

Recently, the Third Circuit, in In re Hackler and Stelzle-Hackler, 938 F.3d 473 (3d Cir. 2019), analyzed whether a “transfer” caused by a tax lien foreclosure sale violated the Bankruptcy Code’s preference statute such that it could be avoided. The Third Circuit in Hackler determined that such a sale could be avoided. Some other courts disagree.

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