Dunn v. First National Bank of Decatur (In re Jenkins Enterprises, Inc.)

OPINION

LARRY L. LESSEN, Bankruptcy Judge.

The issue before the Court is whether the Chapter 7 Trustee may recover a pre-petition setoff as preferential pursuant to 11 U.S.C. § 553(b). In order to resolve this issue, the Court must apply the “improvement in position test”.

The parties have stipulated to the following facts: The Debtor, Jenkins Enterprises, Inc., filed a petition pursuant to Chapter 7 of the Bankruptcy Code on December 5, 2001. Mark T. Dunn is the duly-appointed and qualified Trustee of the estate of the Debtor.

The Debtor operated several Sehlotz-sky’s restaurants in Decatur,…