Four Winds Enterprises, Inc. v. First National Bank (In re Four Winds Enterprises, Inc.)

MEMORANDUM DECISION

At issue is whether the untimely filing of a UCC financing statement falls within the “ordinary course of business” exception to preferences of 11 U.S.C. § 547 (c)(2).

The issue arises on the motion of debtor Four Winds Enterprises, Inc. (“Four Winds”) for summary judgment.

This court has jurisdiction to hear this matter pursuant to 28 U.S.C. § 1334 and § 157(b)(1) and General Order No. 312-D of the United States District Court, Southern District of California. This is a core proceeding pursuant to 28 U.S.C. § 157 (b)(2)(F).

FACTS

In 1982, First National Bank (“FNB”) made certain loans to Four Winds. In connection with these loans, Four Winds executed promissory notes and a security agreement in favor of FNB. Pursuant to the security agreement, FNB obtained a security interest in office furniture and equipment owned by Four Winds. FNB perfected its security interest in the collateral by filing a UCC-1 financing statement.

A filed financing statement is effective for a period of five years from the date of filing. The effectiveness of a filed financing statement lapses upon the expiration of such 5-year period unless a continuation statement is filed prior…