In Re Car Renovators, Debtors. Thomas E. Reynolds, Trustee of the Bankruptcy Estate of Car Renovators, Inc. v. Dixie Nissan

DUBINA, Circuit Judge:

Thomas E. Reynolds, Trustee of the Bankruptcy Estate of Car Renovators, Inc. (“the Trustee”), appeals the district court’s order, which held that although a payment by Car Renovators, Inc. (the “Debtor”) to Dixie Nissan (“Dixie”) making good a previously dishonored check is a preference, it is not avoidable by the Trustee because it was restitution. For the reasons which follow, we reverse.

I. STATEMENT OF THE CASE

On December 21 or 22, 1988, the Debtor tendered two checks totaling $2,674.63 to Dixie for the purchase of car parts and other supplies. The two checks were…