National Bank of Alaska v. Erickson (In re Seaway Express Corporation)

In return for a loan of over $9 million, Seaway Express Corporation (Seaway) granted to National Bank of Alaska (NBA) (plaintiff) a security interest in all of Seaway’s accounts receivable and any resulting proceeds from the sale of the accounts. Seaway agreed to seek NBA’s permission before disposing of any collateral in which NBA had an interest. Thereafter, Seaway brought suit against Anchorage Fairbanks Freight Service, Inc. (AFFS), attempting to collect an account receivable of $1 million owed to Seaway by AFFS. As part of the resulting settlement, Seaway sold the account back to AFFS in return for a parcel of real property. Although NBA knew of the proposed settlement, NBA did not object. After the transfer of the land, NBA requested that Seaway record a deed of trust in the real property in NBA’s favor. Seaway refused and subsequently filed for Chapter 11 bankruptcy. Seaway sold the real property and deposited the proceeds into a segregated cash-collateral fund. Thereafter, Warren Erickson (defendant) was appointed as the bankruptcy trustee of Seaway’s estate. In the bankruptcy proceedings, NBA attempted to claim a priority interest in the proceeds of the sale of the real property, based on NBA’s perfected security interest in the proceeds of the sale of the AFFS account. Erickson moved for summary judgment. The bankruptcy court rejected NBA’s claim and granted Erickson’s motion. The Bankruptcy Appellate Panel affirmed. NBA appealed.