Bankruptcy Case Is Reminder On Collateral Ownership Issue

By Deborah Enea, Frank Montes de Oca and Kayla Weldon (June 27, 2022, 4:15 PM EDT) -- On April 28, the U.S. Bankruptcy Court for the Northern District of Oklahoma in Kirtley v. Mabrey Bank (In re: Rudick) held that an entity other than the debtor may grant a lien on the debtor's property, affirming the legal standard that consent of the true property owner is sufficient to give a debtor, who lacks title in the goods, sufficient rights in collateral to grant a security interest in that property.[1]

As a result, the bankruptcy court also held the bank's security interest, perfected prior to the debtor's bankruptcy, was enforceable and had priority over the bankruptcy trustee's rights to...

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