In re QMECT, Inc.

QMECT, Inc. (QMECT) ran an electroplating business and granted junior secured creditor Burlingame (Burlingame) a floating security interest in its inventory, accounts receivable, and after-acquired property, under which Burlingame's collateral value automatically grew as QMECT generated new receivables. During the 90 days before QMECT's bankruptcy filing, new receivables increased the value of Burlingame's collateral, but Burlingame remained undersecured throughout that period, and QMECT's debt to Burlingame grew by more than the collateral value did. The trustee sought to avoid the collateral-value increases as preferential transfers under § 547(b), and Burlingame moved for summary judgment based on the floating-lien exception.