Laserfiche WebLink
Lisa Brown, Esq. • <br /> December 8, 1988 <br /> Page 3 <br /> Mr. Henderson states that any attempt to foreclose on the property <br /> would violate the automatic stay provisions of the Bankruptcy <br /> Code. Based on this premise, he concludes the Bank could not have <br /> done more than perfect its security interest. However, Mr. <br /> Henderson misapprehends the nature of the Bankruptcy -Court's <br /> action, which had nothing to do with perfecting a security <br /> interest. The court's order allowed for a modification of the <br /> automatic stay to allow the Bank to enter the property and sell <br /> its collateral. Such actions are far beyond any filing or other <br /> steps required to perfect a security interest. See Cal. Com. Code <br /> § 9304 (setting forth requirements for perfection of security <br /> interests) . In fact, the court's description of what the Bank <br /> could do is almost exactly the definition of a foreclosure. <br /> Black's Law Dictionary (5th Ed. ) 581. <br /> While we are not familiar with all the details of EP's bankruptcy, <br /> the court apparently recognized, on receiving the Bank's request <br /> to enter the property, that the Bank had a priority interest in <br /> its collateral, including the tanks, and that the amount received <br /> from sale of the collateral probably would not exceed the amount <br /> owed to the Bank. Thus, the court saw no reason to make the Bank <br /> wait for the formulation of a plan of reorganization or <br /> liquidation to recoup its losses on the promissory note to EP. <br /> Therefore, the court modified the automatic stay to allow the Bank <br /> to enter the property and foreclose on its collateral to satisfy <br /> its debt. <br /> In any case, the Port reiterates its position that your office and <br /> the Health Department should not try to be the arbiters of a <br /> purely private dispute. The Health Department should issue an <br /> order immediately to all parties who may be responsible, i.e. , EP, <br /> Mr. Smith and the Bank, and let them decide how to allocate <br /> liability among themselves. <br /> We look forward to your response, and please do not hesitate to <br /> call if you have any questions. <br /> Sincerely, +1 V1 <br /> LLI / CM I <br /> Gary G. Allen 7U iPj <br /> DORAZIO, BARNHORST & BONAR <br /> V <br /> GGA:jln UC�NLy�4 <br /> 34/1051: 03 /� � U /gel ( I`" <br /> . <br /> I / I <br /> cc: Mr. Alexander Krygsman ��� , 6 �' 1 <br />