In re Jim Ross Tires, Inc.

In 2006, Jim Ross Tires, Inc. (JRT) (debtor) filed a chapter 7 bankruptcy petition. Am-Pac Tire Dist., Inc. (AmPac) and Tradition Bank (creditors) filed proofs of claim pursuant to several financing statements. AmPac filed a financing statement in 2002 stating JRT’s name as “Jim Ross Tires, Inc. dba HTC Tires & Automotive Centers.” Tradition Bank filed a financing statement in 2004 stating JRT’s name as “Jim Ross Tire Inc.” JRT’s name per the Texas Secretary of State was “Jim Ross Tires Inc.” JRT’s trade name, “HTC Tires & Automotive Centers,” expired in 2000. The bankruptcy trustee (Trustee) objected to the proofs of claim and sought to avoid AmPac and Tradition Banks’ unperfected security interests under the Bankruptcy Code. The Trustee argued that the 2002 and 2004 financing statements were inadequate because they failed to properly list JRT’s name as required by the Texas Business and Commerce Code (Code), rendering the financing statements ineffective. AmPac argued that its inclusion of the dba at the end of JRT’s name on the 2002 financing statement should be ignored because the Code set forth only a minimum limitation for stating the debtor’s name. Tradition Bank argued there was nothing in the standard search logic that would prohibit the official search engine from finding the 2004 financing statement merely because an “s” was missing at the end of the name. Tradition Bank additionally argued that its security interest should be perfected because the 2004 financing statement could be located by using nonstandard search logic.