In re Machinery, Inc.
United States Bankruptcy Court for the Eastern District of Missouri
342 B.R. 790 (2006)
Machinery, Inc. (Machinery) leased aerial lifts for construction projects. General Electric Capital Corporation (GE) (plaintiff) financed the purchases of these lifts through a financing and security agreement. The security agreement granted GE a security interest in the lifts and all proceeds from the lifts. Union Planters Bank (Union Planters) (defendant) provided working capital to Machinery through a line of credit. The line of credit was secured by a blanket lien on all inventory, accounts, and proceeds from inventory. GE’s security interest had priority over Union Planter’s security interest. Machinery filed for bankruptcy and entered into a plan of reorganization under Chapter 11. Through the plan, Machinery attempted to grant Union Planters a senior security interest in Machinery’s cash proceeds. However, GE objected to that portion of the plan, and the bankruptcy court affirmed GE’s senior security interest in the lifts and the proceeds from the lifts. As part of the plan, Machinery deposited all of its cash proceeds into its general bank account with Union Planters. Machinery defaulted on its obligations under the plan in late 2002. GE then requested that Union Planters send GE all proceeds from the lifts. Union Planters refused. GE then filed an adversary proceeding in the bankruptcy against Union Planters, seeking a judgment that GE is entitled to the lift proceeds.
Rule of Law
Holding and Reasoning (McDonald, J.)
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