## Facts

- Diane Beasley bought a car using purchase-money financing from Fidelity Financial Services, Inc., granting Fidelity a security interest in the vehicle.
- Beasley took possession of the vehicle, and Fidelity mailed the documentation to perfect its lien under Missouri law 21 days later.
- Missouri law treated a motor vehicle lien as perfected as of the date of its creation if the creditor filed the required documents within 30 days of the debtor taking possession.
- Beasley filed bankruptcy, and the trustee sought to avoid Fidelity’s lien as a preferential transfer under 11 U.S.C. § 547(b).
- Fidelity invoked the “enabling loan” (purchase-money) exception in 11 U.S.C. § 547(c)(3), which requires, among other elements, that the security interest be “perfected on or before 20 days after the debtor receives possession” of the property.

## Issues

1. Whether a creditor satisfies 11 U.S.C. § 547(c)(3)(B)’s 20-day perfection requirement by completing perfection steps after 20 days when state law provides a longer grace period that relates perfection back to an earlier date.
2. When a transfer is “perfected” for purposes of § 547(c)(3)(B) in light of § 547(e)(1)(B)’s definition of perfection.

## Decision

- The Supreme Court affirmed the judgment for the trustee.
- A security interest is “perfected” for § 547(c)(3)(B) when the secured party completes the steps required by state law to perfect, not when state law retroactively deems perfection effective.
- Because Fidelity completed the necessary perfection step after the 20th day, it could not use Missouri’s relation-back rule to qualify for the § 547(c)(3) exception, and the lien was avoidable as a preference.

## Legal Principles

- Under 11 U.S.C. § 547(e)(1)(B), a transfer is perfected when a simple-contract creditor cannot obtain a superior judicial lien; this occurs only after the secured party has actually completed all required perfection acts.
- For 11 U.S.C. § 547(c)(3)(B), the federal 20-day deadline is satisfied only if state-law perfection requirements are completed within 20 days after the debtor receives the property.
- State relation-back or grace-period provisions that backdate perfection do not extend the federal timing requirement for the enabling-loan exception.
- State law supplies the required perfection steps, but federal bankruptcy law governs the timing needed to prevent avoidance under § 547(c)(3).

## Conclusion

The Court held that § 547(c)(3)(B) protects a purchase-money security interest from preference avoidance only if the creditor completes state-law perfection steps within 20 days of the debtor’s receipt of the collateral, and state relation-back rules cannot cure a late perfection for federal bankruptcy purposes.


Fidelity Fin. Servs., Inc. v. Fink, 522 U.S. 211 (1998)