FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
In the Matter of: JEFFREY L.
SILVERMAN; FAYE J. SILVERMAN,
Debtors,
No. 08-56508
STATE COMPENSATION INSURANCE
FUND, D.C. No.
2:08-cv-01311-VBF
Appellant,
OPINION
v.
NANCY HOFFMEIER ZAMORA,
Chapter 7 Trustee,
Appellee.
Appeal from the United States District Court
for the Central District of California
Valerie Baker Fairbank, District Judge, Presiding
Argued and Submitted
February 1, 2010—Pasadena, California
Filed August 12, 2010
Before: Mary M. Schroeder, Raymond C. Fisher and
N. Randy Smith, Circuit Judges.
Opinion by Judge N.R. Smith
11517
11520 IN THE MATTER OF SILVERMAN
COUNSEL
Reem J. Bello (argued) & Jeffrey I. Golden of Weiland, Gol-
den, Smiley, Wang, Ekvall & Strok, LLP, Costa Mesa, Cali-
fornia, for plaintiff-appellee Nancy Hoffmeier Zamora,
Chapter 7 Trustee.
Virginia O’Ryan Hoyt (argued), San Francisco, California, for
defendant-appellant State Compensation Insurance Fund.
OPINION
N.R. SMITH, Circuit Judge:
In this appeal, we are asked to resolve two novel questions:
(1) whether district court decisions bind bankruptcy courts in
other districts and (2) whether criminal restitution payments
are recoverable by a trustee in bankruptcy as preferences
under 11 U.S.C. § 547(b). We conclude that (1) district courts
do not bind bankruptcy courts in other districts and (2) crimi-
nal restitution payments, so long as they otherwise meet the
statutory requirements of § 547(b), are recoverable by a
trustee as preferences.
I. Background
Jeffrey and Faye Silverman owned and operated an electri-
cal contracting company, for which State Compensation
Insurance Fund (“State Fund”) provided workers’ compensa-
tion insurance for the 2002, 2003, and 2004 policy periods.
IN THE MATTER OF SILVERMAN 11521
Sometime in October 2004, the Silvermans began participat-
ing in a scheme, wherein they underreported payroll, under-
paid premiums, and prevented injured workers from obtaining
benefits under the workers’ compensation law. The govern-
ment discovered the fraud and indicted the Silvermans for
insurance fraud under California Insurance Code section
11880(a). The Silvermans pleaded nolo contendere and were
convicted pursuant to a plea agreement in March 2005,
shortly after paying $101,531 in restitution to State Fund,
with the payment included as part of the court-ordered sen-
tence.
A. Bankruptcy Court Proceedings
On April 29, 2005, the Silvermans filed a petition for Chap-
ter 7 bankruptcy in the United States Bankruptcy Court for the
Central District of California, and a bankruptcy trustee, Nancy
Zamora (“the Trustee”), was appointed. 11 U.S.C. § 547(b)
outlines that a trustee may recover the transfer of “an interest
of the debtor in property” that is “(1) to or for the benefit of
a creditor; (2) for or on account of an antecedent debt owed
by the debtor before such transfer was made; (3) made while
the debtor was insolvent;” and that was “(4) made . . . on or
within 90 days before the date of the filing of the [bank-
ruptcy] petition.” Believing that the restitution payment fit
this statutory definition, the Trustee filed adversary proceed-
ings against State Fund on April 5, 2007 to recover the crimi-
nal restitution payment.
State Fund and the Trustee filed cross-motions for sum-
mary judgment in the bankruptcy court. The Trustee argued
that the payment met the facial requirements of § 547(b).
State Fund argued that § 547(b) does not apply to criminal
restitution payments in any event. State Fund relied mainly on
Kelly v. Robinson, 479 U.S. 36 (1986), in which the Supreme
Court found that criminal restitution payments were non-
dischargeable in bankruptcy, and Becker v. County of Santa
Clara (In re Nelson), 91 B.R. 904 (N.D. Cal. 1988), in which
11522 IN THE MATTER OF SILVERMAN
the Northern District of California ruled that, because crimi-
nal restitution payments are non-dischargeable under Kelly,
they are not preferences under § 547(b).
The bankruptcy court found Kelly distinguishable and
declined to follow Nelson, finding it unpersuasive. The bank-
ruptcy judge stated:
I do not find [Nelson] persuasive. The Kelly opinion
dealt with dischargeability, not avoidability. Indeed,
even the Nelson court conceded that the “historical
exception to avoidance of restitution does not appear
to be as clearly established as the exception for dis-
charge of restitution . . . .”
Having found that all the elements of § 547 had been met, the
bankruptcy court concluded that the Trustee could recover the
restitution payment. The bankruptcy court proceeded to give
two additional reasons for its ruling. First, the court noted that
“if Congress intended to exclude restitution awards from a
preference action, it knows exactly how to do it . . . .” Second,
the court found no good public policy reason to treat criminal
restitution payments differently from any other payments
received during the preference period.
B. District Court Proceedings
State Fund appealed the bankruptcy court’s order to the dis-
trict court, and the district court affirmed on August 12, 2008.
The district court stated:
[T]he plain language of 11 U.S.C. § 547 and the
weight of legal authority support the Bankruptcy
Court’s finding that the restitution payment to
Appellant was an avoidable preferential payment.
. . . This Court finds that [Nelson] is non-binding
precedent, and [Kelly] is factually distinguishable.
IN THE MATTER OF SILVERMAN 11523
State Fund now appeals.
II. Standard of Review
“Because this court is in as good a position as the district
court to review the findings of the bankruptcy court, it inde-
pendently reviews the bankruptcy court’s decision.” In re
Allen, 300 F.3d 1055, 1058 (9th Cir. 2002) (quoting Ragsdale
v. Haller, 780 F.2d 794, 795 (9th Cir. 1986)). “We review the
bankruptcy court’s conclusions of law de novo and review its
findings of fact for clear error.” Id. Because neither party dis-
putes any of the bankruptcy court’s factual findings, we
address only the bankruptcy court’s conclusions of law.
III. Discussion
On appeal, State Fund argues both that: (1) the Northern
District of California’s ruling in Nelson was binding on the
bankruptcy court and, therefore, the bankruptcy court erred by
not following it; and (2) 11 U.S.C. § 547(b)’s prohibition on
preferences does not apply to criminal restitution payments.
We reject both arguments and affirm the district court.
A. District Court Decisions do not Bind
Bankruptcy Courts in other Districts
State Fund argues that, because “[b]ankruptcy courts
should be bound by published district court bankruptcy appel-
late decisions,” the bankruptcy court erred when it failed to
follow the authority of the Nelson holding (which would have
vindicated State Fund’s position). In support of its argument,
State Fund first assumes that Bankruptcy Appellate Panel
(“BAP”) decisions bind all bankruptcy courts in the Circuit.
It then reasons that, because BAP decisions cannot bind dis-
trict courts, the BAP is “inferior” to district courts. Therefore,
State Fund argues, “one would expect that published deci-
sions of a district court, acting in its appellate capacity, should
11524 IN THE MATTER OF SILVERMAN
equally bind all bankruptcy courts in the Ninth Circuit.” We
disagree.
At present, there is no controlling case law directly on this
point. However, we now make clear that a bankruptcy court
is not bound by a district court’s decision from another dis-
trict. There are logical reasons for our decision.
[1] First, State Fund has structured its argument on a false
premise; we have never held that all bankruptcy courts in the
circuit are bound by the BAP. See, e.g., Bank of Maui v.
Estate Analysis, Inc., 904 F.2d 470, 472 (9th Cir. 1990).1
[2] Second, bankruptcy court decisions cannot be appealed
to district courts in other districts. Therefore, it makes little
sense for such district court decisions to have precedential
authority over out-of-district bankruptcy courts. We have also
held that “[t]he doctrine of stare decisis does not compel one
district court judge to follow the decision of another.” Star-
buck v. City and County of San Francisco, 556 F.2d 450, 457
n.13 (9th Cir. 1977). Were we to hold that bankruptcy courts
are bound by all district court decisions within the circuit,
rather than only the decision of the district judge to whom
their ruling has been appealed, bankruptcy courts would be
subject to a potentially non-uniform body of law.2 We there-
fore hold that the bankruptcy court in this case (located in the
Central District of California) was not bound by the Nelson
1
Nevertheless, we treat the BAP’s decisions as persuasive authority
given its special expertise in bankruptcy issues and to promote uniformity
of bankruptcy law throughout the Ninth Circuit. See In re Rosson, 545
F.3d 764, 772 n.10 (9th Cir. 2008); Bank of Maui, 904 F.2d at 472
(O’Scannlain, J., specially concurring).
2
This case does not present the question whether bankruptcy courts are
bound by all the decisions of all the district judges within the district
where the bankruptcy court sits. We recognize that, because district judges
within a district do not bind each other, such a requirement could create
the same problem of subjecting bankruptcy courts to a non-uniform body
of law.
IN THE MATTER OF SILVERMAN 11525
holding (a decision by a district judge in the Northern District
of California).
B. Criminal Restitution Payments are Subject to
11 U.S.C. § 547(b)
“ ‘The starting point for our interpretation of a statute is
always its plain language.’ ” Rowe v. Educ. Credit Mgmt.
Corp., 559 F.3d 1028, 1032 (9th Cir. 2009) (citation omitted).
“The plain meaning governs unless a clearly expressed legis-
lative intent is to the contrary, or unless such plain meaning
would lead to absurd results.” Dyer v. United States, 832 F.2d
1062, 1066 (9th Cir. 1987) (citation omitted). “To determine
plain language we consider ‘the language itself, the specific
context in which that language is used, and the broader con-
text of the statute as a whole.’ ” Rowe, 559 F.3d at 1032 (cita-
tion omitted). Therefore, we begin our analysis of § 547(b) by
examining its text and background.
11 U.S.C. § 547(b) states:
[T]he trustee may avoid any transfer of an interest of
the debtor in property—
(1) to or for the benefit of a creditor;
(2) for or on account of an antecedent debt
owed by the debtor before such transfer
was made;
(3) made while the debtor was insolvent;
(4) made—
(A) on or within 90 days before the date
of the filing of the petition; . . .
....
11526 IN THE MATTER OF SILVERMAN
(5) that enables such creditor to receive
more than such creditor would receive if—
(A) the case were a case under chapter 7
of this title;
(B) the transfer had not been made; and
(C) such creditor received payment of
such debt to the extent provided by the
provisions of this title.
[3] “The purpose of this provision is to discourage credi-
tors ‘from racing to the courthouse to dismember the debtor
during his slide into bankruptcy’ and to ‘facilitate the prime
bankruptcy policy of equality of distribution among creditors
of the debtor.’ ” Valley Bank v. Vance (In re Vance), 721 F.2d
259, 260 (9th Cir. 1983) (citing H.R. Rep. No. 95-595, pt. 3,
at 177-78 (1977), as reprinted in 1978 U.S.C.C.A.N. 5963,
6138). Section 547(b) furthers this goal by treating a debtor’s
bankruptcy estate as having been established ninety days prior
to the debtor’s filing of bankruptcy, which would have the
incidental effect of making the debtor insolvent during that
same time period. See County of Sacramento v. Hackney (In
re Hackney), 93 B.R. 213, 218 (Bankr. N.D. Cal. 1988)
(explaining the policy purpose behind preference statutes).
Since an insolvent debtor has no equity in the bankruptcy
estate, any payments made during the ninety-day period are
considered to have been made by the other creditors of the
estate, not the debtor. Id. In order to prevent the creditors
from losing their interests in the bankruptcy estate via the
debtor’s payments during the ninety-day period, the prefer-
ence statute allows the creditors of the estate to recover cer-
tain payments made by the debtor during the preference
period. Id.
[4] The plain language of § 547(b) does not except crimi-
nal restitution payments. State Fund has not argued there is
IN THE MATTER OF SILVERMAN 11527
any clearly expressed legislative intent to the contrary or that
any absurd results might flow from application of § 547(b) to
criminal restitution payments. Under the plain language of
§ 547(b), therefore, we hold that criminal restitution payments
(if they otherwise meet the statutory requirements of
§ 547(b)) are recoverable preferences in Chapter 7 bank-
ruptcy.
Notwithstanding the plain language of the statute, State
Fund now argues that § 547(b) does not apply to criminal res-
titution payments, because there is a judicial exception to
preference statutes for criminal restitution payments and Con-
gress did not explicitly abrogate that doctrine in enacting
§ 547(b). In the alternative, State Fund argues that the Silver-
mans’ payment to State Fund does not meet the first require-
ment under § 547(b), because it was not “to or for the benefit
of a creditor.” We address each argument in turn.
1. There is no Judicial Exception for Criminal
Restitution Payments under Section 547(b)
[5] State Fund argues that criminal restitution payments
should be excepted from the preference statute, even if the
statute does not, on its face, create such an exception. It bases
this argument on the Supreme Court’s holding in Kelly, 479
U.S. at 36. There, the Court was asked to determine whether
criminal restitution payments were dischargeable in Chapter
7 bankruptcy. Section 523(a)(7) excludes from discharge any
debt “to the extent such debt is for a fine, penalty, or forfei-
ture payable to and for the benefit of a governmental unit
. . . .” Absent from this list are criminal restitution payments.
Thus, 11 U.S.C. § 523(a)(7) does not, on its face, exclude
criminal restitution payments from the default requirement
that all debts are discharged in Chapter 7 bankruptcy.
Nevertheless, the Court noted that, “[i]n expounding a stat-
ute, [courts] must not be guided by a single sentence or mem-
ber of a sentence, but look to the provisions of the whole law,
11528 IN THE MATTER OF SILVERMAN
and to its object and policy.” Kelly, 479 U.S. at 43 (quotation
marks and citation omitted). The Court, therefore, “consider-
[ed] the language of §§ 101 and 523 in light of the history of
bankruptcy court deference to criminal judgments and in light
of the interests of the States in unfettered administration of
their criminal justice systems.” Id. at 43-44. The Court
observed that “Congress enacted [§ 523] in 1978 against the
background of an established judicial exception to discharge
for criminal sentences, including restitution orders . . . .” Id.
at 46. Therefore, because Congress had not explicitly over-
ruled the well-established judicial exception exempting crimi-
nal restitution payments from dischargeability statutes, the
Court declined to read the statute as doing so. Id. at 47.
In Kelly, the Court gave two reasons for finding a judicial
exception to § 523 for criminal restitution payments: (1) there
was a long history of this judicial exception for restitution
payments in discharge statutes and (2) allowing criminal resti-
tution payments to be discharged in bankruptcy would disturb
state criminal proceedings. Neither of these rationales applies
to § 547.
We find scant and unpersuasive evidence of an historical
exception to preference statutes for criminal restitution pay-
ments. Even the Nelson court admitted that “an historical
exception to avoidance of restitution does not appear to be as
clearly established as the exception for discharge of restitu-
tion.” Nelson, 91 B.R. at 906. Thus, whereas “Congress
enacted [§ 523] against the background of an established judi-
cial exception to discharge for criminal sentences, including
restitution orders,” Kelly, 479 U.S. at 46, Congress did not
enact § 547 against a similar background.
Nor is the major policy concern underlying the judicial
exception to § 523 for criminal restitution payments impli-
cated under § 547(b). The Kelly Court noted “the basis for this
judicial exception [in the discharge context], [is] a deep con-
viction that federal bankruptcy courts should not invalidate
IN THE MATTER OF SILVERMAN 11529
the results of state criminal proceedings.” 479 U.S. at 47. The
Court proceeded to note that, “[t]he right to formulate and
enforce penal sanctions is an important aspect of the sover-
eignty retained by the States. [The Supreme Court] has
emphasized repeatedly ‘the fundamental policy against fed-
eral interference with state criminal prosecutions.’ ” Id. (quot-
ing Younger v. Harris, 401 U.S. 37, 46 (1971)).
Allowing the Trustee to recover the restitution payment to
State Fund will not interfere with California’s state criminal
proceedings. As Kelly made clear, criminal restitution pay-
ments are non-dischargeable.3 Therefore, the Trustee’s recov-
ery of the restitution payment will not eliminate the
Silvermans’ obligation to pay the restitution money to State
Fund post-bankruptcy; the Silvermans are stuck with that
obligation until their debt has been fully satisfied. In addition,
the Silvermans served their probation and are left with the
criminal record. We cannot see, therefore, how application of
§ 547(b) to State Fund will compromise or dilute the Silver-
mans’ state sentence (other than, of course, to potentially pro-
long the time when the Silvermans will fully satisfy their debt
to State Fund).4
Additionally, allowing an exception to § 547(b) for crimi-
nal restitution payments would frustrate the purposes of the
preference statute. Instead of allowing more equitable distri-
3
And as explained infra, finding that a criminal restitution payment is
non-dischargeable under § 523(a) does not preclude finding the same pay-
ment recoverable under § 547(b).
4
The Nelson court relied entirely on this policy consideration in making
its holding. Nelson, 91 B.R. at 906-07. Specifically, Nelson held that
avoidance of criminal restitution payments poses significant interference
with a state’s criminal justice system, because “[f]ar beyond merely extin-
guishing a debt that ought to be paid in the future, the trustee seeks to
recover restitution that has been paid.” Id. at 906. As we have noted, how-
ever, criminal restitution payments are non-dischargeable and allowing a
party to recover such payments under § 547(b) will not extinguish, or oth-
erwise dilute, the defendant’s obligations to make the payment.
11530 IN THE MATTER OF SILVERMAN
bution of a bankruptcy estate’s assets, excepting non-
dischargeable debts like criminal restitution payments from
§ 547(b) would allow a debtor to pay off this non-
dischargeable debt during the preference period and leave
other creditors with nothing. For example, if the Silvermans’
entire bankruptcy estate were worth the $101,531 paid to
State Fund and this payment were not recoverable, then pay-
ing this debt before bankruptcy would enable the Silvermans
to emerge debt free without having paid anything to their
other creditors. Excepting criminal restitution payments from
§ 547(b) would, therefore, motivate debtors to pay off these
non-dischargeable debts during the preference period, leaving
all other debts to be extinguished in bankruptcy. An economi-
cally rational debtor would likely prefer this outcome over
one where the debtor is left with non-dischargeable debts
post-bankruptcy.
[6] The plain language of the statute does not except crimi-
nal restitution payments, and there is no historical justification
or compelling policy reason for excepting them in spite of the
plain language. We hold, therefore, that § 547(b) does not
except criminal restitution payments wholesale; only where
such payments do not meet the requirements of § 547(b) can
they be excepted from this statute.
2. The Restitution Payment was “to or for the Benefit
of” State Fund
Alternatively, State Fund argues that, even if there is no
general exception to § 547(b) for criminal restitution pay-
ments, the Silvermans’ payment in this case did not meet the
statutory requirements of § 547(b): the payment was not “to
or for the benefit of a creditor.” 11 U.S.C. § 547(b)(1).
Rather, State Fund argues, the restitution payment was “to or
for the benefit of society as a whole.” We disagree.
[7] State courts employ a variety of tools to further their
sentencing goals, including ordering restitution payments to
IN THE MATTER OF SILVERMAN 11531
the victim of a crime. “A restitution order requires the crimi-
nal offender to pay money or to render services to his victim
in order to redress the loss he has inflicted.” Victim Restitu-
tion in the Criminal Process: A Procedural Analysis, 97 Harv.
L. Rev. 931, 932 (1984) (footnote omitted). The remedy of
restitution is unique, as “it forces the defendant to confront,
in concrete terms, the harm his actions have caused,” in con-
trast to traditional fees or sentences, which are often “calcu-
lated without regard to the harm the defendant has caused.”
Kelly, 479 U.S. at 49 n.10. Thus, restitution furthers the tradi-
tional sentencing goals of rehabilitation and deterrence, by
forcing defendants to directly witness the effects of their
crimes. Id. The purpose of restitution, therefore, is not merely
to compensate the victim; it is to further the state’s sentencing
goals. Id. at 49 n.10, 52-53. But of course, court-ordered resti-
tution payments accomplish this goal by requiring the defen-
dant to directly compensate a victim for some, if not all, of the
victim’s loss. See id. at 52-53. Thus, it only makes sense that
a court-ordered restitution payment is “to or for the benefit of
the [victim/]creditor,” even if the restitution payment’s
broader purpose is to further the state’s sentencing goals.
Here, the Silvermans defrauded State Fund out of approxi-
mately $101,531 (by State Fund’s own estimate), which the
state court ordered the Silvermans to pay back in full to State
Fund. It seems rather clear that, even if this payment benefit-
ted society as a whole, it also benefitted State Fund.
[8] To the extent it is not clear that the Silvermans’ pay-
ment was “to or for the benefit of” State Fund, California’s
statutory scheme for criminal restitution payments erases any
doubt. First, California Penal Code section 1202.4(f) notes
that the amount of restitution awarded is “based on the
amount of loss claimed by the victim.” Though it is unknown
“how much premium would have been due for the workers’
compensation services provided to the Silvermans under their
Policy, had they not committed fraud,” the $101,531 eventu-
ally paid to State Fund was based on State Fund’s own calcu-
11532 IN THE MATTER OF SILVERMAN
lations. Thus, State Fund derived a benefit from the court-
ordered restitution payment, because the payment was based
on State Fund’s own estimated loss.
Second, California Penal Code section 1202.4 holds that
“in addition to any other penalty provided or imposed under
the law, [the court] shall order the defendant to pay . . .
[r]estitution to the victim . . . which shall be enforceable as
if the order were a civil judgment.” California Penal Code
§ 1202.4(a)(3) (emphasis added). Being able to enforce the
restitution order as a civil judgment, State Fund had extensive
control and discretion of the payment’s execution, which fur-
ther establishes State Fund’s interest/benefit in the payment.
[9] Finally, California Penal Code section 1202.4(a)(1)
commands that the victim “shall receive restitution directly
from [the] defendant . . . .” Consistent with this statute, the
Silvermans paid the restitution payment via a cashier’s check
made out only to State Fund. State Fund can hardly claim to
have not received a benefit from such a direct and exclusive
payment. Therefore, we hold that the Silvermans’ payment
was “to or for the benefit of” State Fund under § 547(b).5
State Fund, relying on language in Kelly, nonetheless
argues that, because the payment was “to and for the benefit
of society as a whole,” it could not have been for its own ben-
5
We also note our prior case law, which (though not directly on point)
provides useful guidance. In California Trade Technical School, Inc. v.
United States (In re California Trade Technical Schools, Inc.), 923 F.2d
641, 648 (9th Cir. 1991), we addressed a Chapter 7 bankruptcy trustee’s
efforts to recover payments made by the debtor, California Trade Techni-
cal Schools, to the Department of Education for federal student assistance
program monies that the debtor still owed. We noted that civil restitution
payments owed the Department of Education under § 547(b)(1) were “to
or for the benefit of a creditor [i.e., the Department of Education].” Id.
That outcome underscores our holding here that payments that benefit
society as a whole (as the payment to the DOE would have, and as the
payment to State Fund would) may also benefit the specific creditor,
which makes such payments “to or for the benefit of a creditor.”
IN THE MATTER OF SILVERMAN 11533
efit. In Kelly, the Supreme Court stated that, “[t]he criminal
justice system is not operated primarily for the benefit of vic-
tims, but for the benefit of society as a whole.” 479 U.S. at 52
(emphasis added). It further noted that “restitution orders
imposed in such proceedings operate ‘for the benefit of’ the
State.” Id. at 53 (emphasis added). Thus, because “[c]riminal
restitution does not create a financial debt between private
individuals, but rather to the People of the State of Califor-
nia,” State Fund argues, the restitution payment could not be
“to or for the benefit of” State Fund.
This argument ignores the contextual differences between
the dischargeability statute being analyzed in Kelly and the
preference statute being analyzed here. In Kelly, the Court
was analyzing 11 U.S.C. § 523(a)(7), which excepts from dis-
charge in bankruptcy any debt “to the extent such debt is for
a fine, penalty, or forfeiture payable to and for the benefit of
a governmental unit, and is not compensation for actual pecu-
niary loss . . . .”6 As noted, the Kelly court held that § 523
applied to criminal restitution payments. Having so con-
cluded, the Court proceeded to evaluate whether criminal res-
titution payments were “to and for the benefit of a
governmental unit” and “not compensation for actual pecuni-
ary loss.” Kelly, 479 U.S. at 52. Our analysis here, however,
examines whether a payment was made “to or for the benefit
of a creditor” under § 547(b). The two standards are not mutu-
ally exclusive.
[10] Merely because a payment is “to and for the benefit
of society” under § 523(a)(7) does not mean that payment
cannot also be “to or for the benefit of a creditor” under
6
To be clear, the Supreme Court interpreted the phrase “to and for the
benefit of a governmental unit” to more broadly mean “[to and] for the
benefit of society as a whole.” Kelly, 479 U.S. at 51-52. Thus, for pur-
poses of this analysis, references to a payment being “to and for the bene-
fit of society as a whole” under § 523(a)(7) are the equivalent of being “to
and for the benefit of a governmental unit” under that same section.
11534 IN THE MATTER OF SILVERMAN
§ 547(b)(1). Nothing in Kelly suggests that we should hold to
the contrary. Nor does it make sense to hold that a restitution
payment, which benefits society as a whole, cannot also bene-
fit the victim, who is paid as part of the restitution payment.
Moreover, the Kelly Court’s holding that restitution payments
are not assessed for the purpose of compensating the victim
does not preclude our finding that restitution payments may
nonetheless benefit the victim-recipients. And of course, if the
rule were otherwise, non-dischargeable criminal restitution
payments could never be recoverable as preferences. As noted
above, such a result would frustrate the purposes of the pref-
erence statute. Therefore, we do not read Kelly to hold that
restitution payments are exclusively “to and for the benefit of
society as a whole.”
[11] These considerations all lead us to conclude that,
while the restitution payment to State Fund may have benefit-
ted society, it was also “to or for the benefit” of the Silver-
mans’ creditor, State Fund. The Silvermans’ payment,
therefore, meets the first prong of § 547(b). Because State
Fund concedes the remaining requirements have been met, we
hold the Silvermans’ restitution payment to State Fund was a
recoverable preference under § 547(b).
IV. Conclusion
The bankruptcy court did not err in declining to apply the
ruling in Nelson; district courts do not bind bankruptcy courts
in other districts. Nor did the district court err in allowing the
Trustee to recover the Silvermans’ payment to State Fund.
The plain language of § 547(b) does not except criminal resti-
tution payments, and we do not disrupt that plain language in
our holding today. While we do not read statutes to abrogate
well-established common law in the absence of any explicit
congressional intent to do so, there is simply no evidence of
a well-established judicial exception for criminal restitution
payments from preference statutes. Further, such an exception
would not make sense in light of the policy goals of the pref-
IN THE MATTER OF SILVERMAN 11535
erence statute. Lastly, the payment was “to or for the benefit
of” State Fund, even if it also indirectly benefitted society.
We, therefore, affirm the district court’s grant of the Trustee’s
summary judgment motion.
AFFIRMED