Lien survives bankruptcy

Acceptance Loan had a lien on a Mississippi office building, which was the principal asset of S. White Transportation (“SWT”) when it went into bankruptcy.  Acceptance Loan Co. v. S. White Transportation, No. 12-60648 (August 5, 2013).  Acceptance received notice of SWT’s bankruptcy several times.  After plan confirmation, Acceptance sought a declaration that its lien survived.  The Fifth Circuit held that “passive receipt of notice” did not constitute “participation” in the bankruptcy under In re Ahern Enterprises, 507 F.3d 817, 822 (5th Cir. 2007).  Therefore, the general rule applied that “a secured creditor with a loan secured by a lien on the assets of the debtor who becomes bankrupt before the loan is repaid may ignore the bankruptcy proceeding and look to the lien for satisfaction of the debt.”

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