In re Lash
United States Bankruptcy Court for the Middle District of North Carolina
2010 WL 5141760 (2010)
- Written by Sheryl McGrath, JD
Facts
Buddy Lee Lash (debtor) leased a freight truck from Tucker Capital, Inc. (Tucker) (creditor). The parties’ agreement required Lash to pay rent to Tucker during an initial rental term. After the initial term, each party had the option to terminate with 90 days’ written notice. Absent termination, the agreement automatically extended for one-month terms. However, the agreement also had a terminal rental adjustment clause (TRAC provision) that required Tucker to sell the truck at the end of the initial rental term. The TRAC provision mandated that the sale proceeds be distributed to Tucker to cover the cost of sale and the TRAC amount, which the lease identified as $4,225. Any sale proceeds exceeding the cost of sale plus the TRAC amount would be distributed to Lash. After Lash and Tucker executed the lease agreement, Lash filed a Chapter 13 bankruptcy petition. In the bankruptcy proceeding, Lash contended that the agreement was not a true lease. Instead, Lash contended that the agreement created a security interest for Tucker. The court held a hearing on Lash’s contention. At the hearing, neither party presented evidence on the economic value of the truck.
Rule of Law
Issue
Holding and Reasoning (Waldrep, J.)
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