In re Phillips-Camper
United States Bankruptcy Court for the Northern District of Ohio
359 B.R. 659 (2007)
- Written by Douglas Halasz, JD
Facts
A bankruptcy trustee (plaintiff) initiated an adversary proceeding seeking to avoid a secured creditor’s (defendant) interest in the debtors’ bankruptcy proceeding. Before the bankruptcy filing, the secured creditor had loaned the debtors $10,000, which was represented by a promissory note and a security agreement. Per the security agreement, the secured creditor immediately took physical possession of certain coins that the debtors had pledged as collateral for the loan. Although the security agreement contained a provision allowing the secured creditor to require the debtors’ cooperation with executing a financing statement, the secured creditor never requested that the debtors do so, and the secured creditor never filed a financing statement covering the coins. When the debtors filed for bankruptcy, the debtors owed the entire $10,000 principal amount and the secured creditor remained in possession of the coins. The bankruptcy trustee sought to avoid the secured creditor’s interest pursuant to 11 U.S.C. § 544(a) and argued that the secured creditor held an unperfected security interest in the coins because the secured creditor had never filed a financing statement. The secured creditor moved for summary judgment.
Rule of Law
Issue
Holding and Reasoning (Whipple, J.)
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