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complied with HESCA, and the seller was unaware of his or her HESCA rights, the buyer must come forward with evidence that the seller's HESCA rights were explained and understood.
Facts: In 2002, Nacio Systems, Inc., a California company ("Nacio California"), filed for chapter 11 bankruptcy and ultimately confirmed a plan of reorganization in 2003. Under the 2003 plan, Nacio Investment Group, Inc. ("NIG") provided $500,000 in financing in return for a lien on Nacio California's assets, including its leasehold improvements, all personal property, intellectual property, equipment, receivables, and customer accounts. NIG ended up loaning $800,000 to Nacio California post-confirmation. NIG filed four financing statements in California and two in Nevada. In 2005, Nacio California entered into an asset purchase agreement in which it sold its assets to a Nevada company that took the name Nacio Systems, Inc. ("Nacio Nevada"). The ownership of Nacio California and Nacio Nevada is unrelated. Nacio Nevada then filed for chapter 11 bankruptcy in 2008. NIG filed a secured claim against the estate for about $1 million and Nacio Nevada objected to the claim and argued that there had been no grant of a security interest by Nacio California.
Issue: Whether NIG has a secured claim against the estate of Nacio Nevada.
Rule: The confirmed chapter 11 plan is a contract and may give a party an enforceable interest in collateral.
Holding: NIG had a security interest in any equipment that Nacio California had at the time of the confirmation of its plan of reorganization.
Reasoning: The court first found that there was no basis in the law for NIG's argument that it should be granted an 'equitable' security interest. Additionally, the court overruled NIG's argument that this case was a 'virtual continuation' of the Nacio California case: the equity ownership of the two companies is different and there is no showing that the debt structure of the two companies is the same. However, Nacio Nevada is a successor to Nacio California by virtue of its purchase of Nacio California's assets and the assumption of its obligations. Therefore, NIG has a valid security interest in at least some of Nacio Nevada's assets if it had a valid security interest in Nacio California's assets when Nacio Nevada bought them. The court then stepped through the assets on which NIG claimed a security interest: (i) NIG did not have a security interest in the leasehold improvements because there were mechanic's liens that that had attached to those properties; (ii) NIG had a security interest in the equipment that Nacio Nevada bought from Nacio California that Nacio California owned at the time that Nacio California confirmed its plan of reorganization in 2003; NIG did not have a security interest in any after-acquired equipment because there was neither an after-acquired property clause in the security agreement nor evidence that the parties intended to give NIG a security interest in any after-acquired equipment; and, finally, (iii) NIG did not have a security interest in any copyrights because it failed to file a claim of security interest in the U.S. Copyright Office.
Facts: Acceptance Insurance Companies, Inc. ("AICI") and Acceptance Insurance Company ("AIC") appealed from a decision of the BAP, which affirmed in part and reversed in part the decision of the bankruptcy court. AICI was the parent company of American Growers Insurance Company ("American Growers") and American Agrisurance ("AmAg"). AIC occasionally fronted some multi-peril crop insurance ("MPCI"). Goran Capital Inc. ("Goran") is the parent of Granite Reinsurance Company, Ltd. ("Granite Re") and IGF Insurance Company ("IGF"). Granite Re was in the reinsurance business and was a reinsurer of IGF, who wrote MPCI policies. MPCI is insurance written by private companies that are approved by the Federal Crop Insurance Corporation
©2010 Leif M. Clark
