United States Bankruptcy Court for the Northern District of California
373 B.R. 100 (2007)
QMECT, Inc. (debtor) operated an electroplating business. QMCET filed for bankruptcy. Burlingame (creditor) was a junior secured creditor with a security interest in QMECT’s assets. Burlingame’s security interest including inventory, accounts receivable, and after-acquired property. Under the terms of the parties’ security agreement, the value of Burlingame’s security interest automatically increased when QMECT acquired new accounts receivable. In the 90 days leading up to QMCET’s bankruptcy, QMCET acquired new accounts receivable, which caused a corresponding increase in the value of Burlingame’s security interest. At all times in the 90 days preceding QMCET’s bankruptcy, Burlingame was undersecured, meaning that the value of QMCET’s collateral was less than the debt QMCET owed to Burlingame. Additionally, QMCET’s debt to Burlingame rose by a greater amount than the increase in the value of the collateral. The trustee sought to avoid the value increases in Burlingame’s security interest as a preferential transfer under § 547(b) of the bankruptcy code. Burlingame filed a motion for summary judgment, arguing that the increases in value fell under under an exception for floating liens in inventory and accounts receivable.
Rule of Law
Holding and Reasoning (Tchaikovsky, J.)
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 97,000 law students since 2011. Some law schools—such as Yale, Vanderbilt, Berkeley, and the University of Illinois—even subscribe directly to Quimbee for all their law students. Read our student testimonials.
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students. Read more about Quimbee.
Here's why 221,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 14,100 briefs, keyed to 189 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.