Valley Bank and Trust Co. v. Spectrum Scan, LLC (In re Tracy Broadcasting Corp.)

Summarized by Scottie Kleypas , Scottie S. Kleypas Law, LLC
13 years 4 months ago

Citation:

Valley Bank and Trust Co. v. Spectrum Scan, LLC (In re Tracy Broadcasting Corp.), No. 11-1453 (October 16, 2012)

Tag(s):

Ruling:

REVERSING the District Court, the 10th Circuit held Federal law permits a FCC licensee to grant a security interest in the economic value of its license, and Nebraska law recognizes that a security interest in the proceeds of a license sale attaches when the licensee enters into the security agreement, regardless of whether a sale is contemplated at that time; therefore § 552(b)(1) applies to the proceeds of the sale post-petition

Procedural context:

Appeal from the bankruptcy court for the District of Colorado, the bankruptcy court held that the bank's rights to proceeds of a sale did not exist prior to the filing of Chapter 11 case holding that the sale was subject to two contingencies; the District Court adopted the ruling of the bankruptcy court

Facts:

Debtor executed a promissory note for a $1,596,100 loan from the bank. The note was secured by an agreement dated December 13, 2007, which granted the Bank a security interest in Debtor's general intangibles and their proceeds. Subsequently, another creditor obtained judgment in the amount of $1,400,000. Debtor filed for Chapter 11 and judgment creditor brought an adversary action to determine the extent of bank's security interest. Judgment creditor argued that because FCC license may not be sold without the permission of FCC that the security interest did not attach pre-petition to the FCC license; therefore § 552(a) prohibition on security interests in after-acquired property was applicable precluding the bank from recovering on the lien on the proceeds of the sale of the FCC license post-petition.

Judge(s):

Murphy, Hartz, and Tymkovich, Circuit Judges

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