IPC (USA), Inc. v. Ellis, No. 17-60081 (9th Cir. 2019)
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U.C.C. 9-319(a), which grants a consignee "rights and title to the goods," also grants the consignee an interest in the proceeds of those goods that were generated prior to bankruptcy. The Ninth Circuit affirmed the bankruptcy appellate panel's decision affirming the bankruptcy court's grant of summary judgment for the bankruptcy trustee who brought an adversary proceeding seeking avoidance of transfers.
Under settled bankruptcy law, if a consignee files for bankruptcy, any consigned "goods" in its possession become property of the bankruptcy estate unless the seller has previously provided public notice of its interest in the goods (normally by filing a document known as a "financing statement") and thereby "perfected" its interest. The panel held that this rule also extended to the proceeds from goods sold that are held by the consignee on the date it files for bankruptcy.
Court Description: Bankruptcy The panel affirmed the Bankruptcy Appellate Panel’s affirmance of the bankruptcy court’s summary judgment in favor of a bankruptcy trustee who brought an adversary proceeding seeking avoidance of transfers. The debtor, a distributor of bulk petroleum products, entered into a consignment agreement with IPC (USA), Inc. Under the agreement, IPC delivered fuel to “card lock” sites from which the debtor’s commercial customers purchased fuel using access cards. When the debtor filed for bankruptcy, it had in its possession IPC fuel as well as proceeds from sold fuel, in the form of cash and accounts receivable, that had not yet been remitted to IPC. U.C.C. § 9-319(a) grants a consignee “rights and title to the goods.” If a consignee files for bankruptcy, any consigned “goods” in its possession become property of the bankruptcy estate unless the seller has previously provided
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