McCloud v. Woods (In Re Tom Woods Used Cars, Inc.)

MEMORANDUM

RALPH H. KELLEY, Bankruptcy Judge.

Shortly before its bankruptcy in April, 1981, Tom Woods Used Cars sold a car to the plaintiffs, Joseph Paul McCloud, Jr., and Brenda W. McCloud. They executed an installment sales contract which Tom Woods Used Cars sold to First Tennessee Bank in return for payment of the purchase price of the car. About the same time, the McClouds arranged financing through American National Bank and with the proceeds paid the purchase price again. Tom Woods Used Cars did not use this payment to pay First Tennessee so that American National would be the only…