TMC Areospace, Inc v. Joseph (In re Ice Management Systems)

Citation:
BAP 9th Cir. no. CC-14-1046
Tag(s):
Ruling:
In an unpublished decision, the 9th Circuit BAP affirmed the ruling of the Bankruptcy Court for the Central District of California that the moneys received from the sale of estate assets subject to existing liens and encumbrances are not subject to the liens and encumbrances, regardless of whether there was "equity" in the property sold because the lienholders retain their interests in the property, their collateral, after the sale.
Procedural context:
Appeal to the BAP of a final bankruptcy court order approving sale of personal property.
Facts:
After failing to obtain approval to sell assets free and clear of liens, the Chapter 7 Trustee sought to sell that property subject to existing liens and encumbrances. An entity asserting a first position lien in the property being sold opposed the sale, arguing that the moneys received from the sale were the proceeds of its collateral and should be paid to it. The bankruptcy court rejected that argument and approved the sale. Although not relevant to the decision, the debtor disputed the objecting creditor's claim in part, the stalking horse bidder was an affiliated with the principal of the debtor, and the successful bidder was affiliated with the objecting creditor.
Judge(s):
Kirscher, Kurtz, Davis

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