In re C.W. Mining Company

C. W. Mining Company (debtor) was in the business of mining coal and selling it to customers. C. W. Mining received various loans from creditors and granted extensive security interests in a broad range of assets, including its accounts receivable. In 2007 four of C. W. Mining’s creditors filed Uniform Commercial Code (UCC) financing statements with the Utah Division of Corporations and Commercial Code (the Utah Division). The Utah Division maintained a searchable database of financing statements. In 2008 C. W. Mining entered a Chapter 7 bankruptcy that was converted from an involuntary Chapter 11 bankruptcy filed against C. W. Mining. Before the bankruptcy was filed, C. W. Mining had executed two sales contracts for coal with UtahAmerica Energy, Inc. (UtahAmerica) valued at $2,797,246.79. Rather than paying these funds to C. W. Mining, UtahAmerica chose to interplead the funds. C. W. Mining’s creditors sought payment on their security interests. However, a search using C. W. Mining’s name did not find any of the creditors’ financing statements, because the financing statements had given the name of C. W. Mining Company as CW Mining Company without the periods and spaces. The bankruptcy trustee moved to avoid the creditors’ claims and argued that the creditors’ security interests had not been perfected despite the filing of financing statements.