A Missouri bankruptcy court has permitted a creditor to take possession of spare aircraft parts and equipment from a debtor despite the fact that the creditor failed to perfect its security interest in the equipment.
Dueling Provisions: Creditor Prevails in Showdown Between Bankruptcy Code Sections
A Missouri bankruptcy court has permitted a creditor to take possession of spare aircraft parts and equipment from a debtor despite the fact that the creditor failed to perfect its security interest in the equipment. In an issue of first impression in the Sixth Circuit, the court held that under the plain language of Section 1110 of the Bankruptcy Code, a creditor, as a conditional vendor, had a right to take possession of the collateral pursuant to its agreement with the debtor, and that this right was not limited or otherwise affected by any other section of the Code (including Section 544) or by any power of the court. <i>Vanguard Airlines, Inc. v. International Aero Components, Inc.,</i> 295 B.R. 908 (Bkrtcy.W.D.Mo.,2003).
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