Brooks Shoe Manufacturing Co. v. United Telephone Co. (In Re Naudain, Inc.)

OPINION

EMIL F. GOLDHABER, Bankruptcy Judge:

In the case sub judice, the debtor, relying on section 553(a)(3) of the Bankruptcy Code (“the Code”), seeks the return of a deposit, which it delivered to the defendant prior to having filed its petition for reorganization under chapter 11 of the Code, in order to secure payment for future telephone charges. Because the record establishes that the sole purpose of the deposit was to have monies available by which the defendant could setoff future bills of the debtor, we conclude that the debtor is entitled to recover the deposit in question.

The facts…