Ruling Re Application of Enabling Loan Exception in Chapter 7 Proceedings

In re Johnson, No. 08-5088, concerned a challenge to the Bankruptcy Appellate Panel's (BAP)judgment for the trustee and against the lender of the debtor's pick-up truck, in Chapter 7 proceedings.  In affirming the judgment of the BAP, the court held that the enabling loan exception of 11 U.S.C. section 547(c)(3) does not protect the lender's interest in the pick-up truck from avoidance as a preferential transfer because the perfection of the lender's security interest in the truck did not occur until March 7, 2005, when the security interest was actually noted on the certificate of title.

Related Resource:

• Full text of In re Johnson