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But be careful. It does not actually mean what it seems to mean. It puts the trustee in the position of the ideal judgement creditor with all the rights available to such a creditor under state law (including priority over unperfected security interests). 544(1)(3) seems to go well beyond that in respect of land, eliminating equitable interests under even express trusts. See however A. Kull, "Restitution in Bankruptcy: Reclamation and Constructive Trust" (1998) 72 Am Bankruptcy LJ 265, 292-300.

By the way some years ago in my own work and in communication with Andrew Kull, I suggested (as in my recent posting) that the inconsistent US cases could be understood as turning on a distinction between a vested equitable interest (as in a payment by mistake) and a power to avoid and revest (as in a Ponzi scheme) and his view (if I recall correctly) was that modern American law has lost this distinction.

L

At 01:20 PM 14/5/02 +0800, Tjio Hans wrote:

There are signs of equitable subordination in the UK: Mac-Jordan Construction v Brookmount Erostin [1992] BCLC 350.

Might there be another answer provided by statute? S 544(a) of the Bankruptcy Code, USC Title 11 provides that:

(a) The trustee shall have, as of the commencement of the case, and without regard to any knowledge of the trustee or of any creditor, the rights and powers of, or may avoid any transfer of property of the debtor or any obligation incurred by the debtor that is voidable by -

(1) a creditor that extends credit to the debtor at the time of the commencement of the case, and that obtains, at such time and with respect to such credit, a judicial lien on all property on which a creditor on a simple contract could have obtained such a judicial lien, whether or not such a creditor exists;

(2) a creditor that extends credit to the debtor at the time of the commencement of the case, and obtains, at such time and with respect to such credit, an execution against the debtor that is returned unsatisfied at such time, whether or not such a creditor exists; or

(3) a bona fide purchaser of real property, other than fixtures, from the debtor, against whom applicable law permits such transfer to be perfected, that obtains the status of a bona fide purchaser and has perfected such transfer at the time of the commencement of the case, whether or not such a purchaser exists.