In Re Robert B. Lee Enterprises, Inc., Debtor. Michael A. Grassmueck, Inc., Trustee v. Champion Credit Corporation

The issue we decide in this appeal is whether advances made by a secured party’s assignee under a security agreement containing a future advance clause have priority over other creditors’ secured liens which arose after the originally secured party’s rights were perfected but before future advances were made by the assign-ee. We hold that the assignee’s future advances are entitled to the priority position of the secured party under the security agreement, and affirm the decisions of the bankruptcy court and the bankruptcy appellate panel (“BAP”).

FACTS

FinanceAmerica Private Brands, Inc. (“FinanceAmerica”) entered into a flooring arrangement with Robert B. Lee Enterprises (“Lee”) to provide financing for Lee’s inventory of mobile homes. FinanceAmeri-ca lent money to Lee under a security agreement which gave it a floating security interest in whatever mobile home inventory Lee had from time to time. The security agreement contained a future advance clause. It also contained a provision that it could be assigned. FinaneeAmeriea’s rights under the security agreement were perfected and appropriate financing statements were filed with the Oregon Secretary of State.

FinanceAmerica…