In re Wild Bills, Inc.
United States Bankruptcy Court for the District of Connecticut
206 B.R. 8 (1997)
Wild Bills, Inc. (debtor) filed for reorganization under chapter 11 of the bankruptcy code. The chapter 11 case was later converted to a chapter 7 bankruptcy. Union Trust (creditor) was Wild Bills’s bank. Union Trust had made substantial loans to Wild Bills, and Wild Bills had funds deposited in Union Trust bank accounts. Ninety days prior to the filing, the debt owed by Wild Bills to Union Trust was $1,083,431 more than the amount Wild Bills had in its Union Trust deposit accounts. Two days later and 88 days prior to the bankruptcy filing, Wild Bills withdrew funds from its Union Trust account. The decrease in Wild Bills’s balance caused the difference between the amount owed by Wild Bills and the amount available to Union Trust in the deposit accounts to increase to $1,094,674. On January 25, Union Trust declared the loans in default and exercised its right of setoff against the deposit accounts. The bankruptcy trustee sought to recover from Union Trust under § 553(b) of the bankruptcy code, arguing that the setoff was a payment preference.
Rule of Law
Holding and Reasoning (Shiff, J.)
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