Ward v. Bank of Granite (In re Hickory Printing Group, Inc.)
479 B.R. 388
Bankr. W.D.N.C.2012Background
- Bank of Granite held a security interest in Debtor's inventory and receivables; Trustee seeks to avoid transfers under 11 U.S.C. §550.
- Phase 1 limited to Bank's UCC filings and their perfection/termination history.
- Termination Statement was filed Dec 1, 2008 terminating the Original Financing Statement and unperfectioning the lien.
- Correction Statement was filed Nov 10, 2009, but court finds it ineffective to revive perfection or affect the termination.
- New Financing Statement filed May 27, 2010 re-perfected the lien; Debtor transferred property interests to Solutions via a sale.
- Lien was unperfected during the gap between Dec 1, 2008 and May 27, 2010; New Financing Statement constitutes a transfer under bankruptcy law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Effect of termination on lien status | Termination terminated the lien; correction did not revive it | Correction could revive/perfect the lien; termination may be corrected | Termination rendered lien unperfected; correction ineffective |
| Effect of Correction Statement | Correction did not restore perfection or revive lien | Correction restored or maintained perfection | Correction Statement ineffective; lien remained unperfected |
| Effect of New Financing Statement | New filing transferred the Debtor's property interest | New filing merely re-perfected or did not transfer | New Financing Statement constituted a transfer of an interest in property |
Key Cases Cited
- In re Kitchin Equip. Co. of Va., Inc., 960 F.2d 1242 (4th Cir. 1992) (termination of lien unperfects; correction statements have final, harsh effect)
- In re York Chem. Indus., Inc., 30 B.R. 583 (Bankr. D.S.C. 1983) (termination of financing statement renders lien unperfected)
- In re Pac. Trencher & Equip., Inc., 27 B.R. 167 (9th Cir. BAP 1983) (termination statements effect final unperfection of lien)
- In re Silvernail Mirror and Glass, Inc., 142 B.R. 987 (Bankr.M.D. Fla. 1992) (termination statement public notice; correction not affecting initial record)
- In re Bonds Distrib. Co., 39 F.App’x 895 (4th Cir. 2002) (notice filing; minimal errors do not destroy efficacy of financing statement)