In Re James E. O'COnnell Co., Inc., a California Corporation, Debtor. Kal W. Lines, Trustee v. North Coast Production Credit Association

Kal W. Lines is the trustee of the estate of James O’Connell Co., Inc. in a Chapter 7 bankruptcy proceeding. North Coast Pro duction Credit Association (“PCA”) is a secured creditor. The trustee appeals the district court’s order affirming the bankruptcy court’s order (1) denying in part the trustee’s motion for reimbursement of expenses claimed to have been made for the preservation and maintenance of PCA’s collateral, and (2) directing the trustee to turn over to PCA cash collateral from the sale of the debtor’s personal property. We affirm in part and remand to permit the bankruptcy court to make further factual findings.

FACTS

PCA held a first trust deed on all of the bankrupt debtor’s real property and a perfected security interest in some of the debt- or’s personal property. The trustee has collected rent from, and sold, some of the debtor’s real property. He continues to collect rent from two remaining parcels of real property.

As parcels of real property were sold, the trustee deducted the actual costs of sale and paid the remaining sales proceeds over to PCA. The trustee did not deduct any of the advances he had made on behalf of the properties. These advances were for…