Research-Planning, Inc. v. Segal

SEYMOUR, Circuit Judge.

This case presents the question whether funds placed in escrow with the debtor, who improperly used them to pay debts owed to a good faith creditor, constitute part of the bankruptcy estate when recovered by the trustee in settlement of a preference action.1 A divided panel of our court reversed the decision of the bankruptcy and district courts and held that these funds never became part of the bankruptcy estate and thus were recoverable as funds held in trust for the escrow depositor. 872 F.2d 335. We granted rehearing en banc. We now vacate the panel decision and…