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Dean Hightree v. First Nat'l Bank of Omaha (In re M & S Grading, Inc.), Ch. 7, BK02-81632, A05-8071 (Mar. 28, 2007)

In a dispute over competing rights to the debtor’s accounts receivable, the court granted partial summary judgment to the lender holding perfected pre-petition security interests in inventory, accounts, equipment, and other collateral. The other claimants to the accounts receivable were the multi-employer pension and welfare benefit plans representing the debtor’s employees. The plans argued that because the debtor failed to pay plan contributions withheld from employees’ wages, the unpaid contributions were property of the pension and welfare benefit plans under ERISA and were held in trust by the debtor, giving the plans a superior claim to the money. The court found that the evidence showed the funds at issue were the employer’s share of the plan contributions, rather than contributions that were withheld from the employees’ paychecks, and thus were not held in constructive trust. The funds were properly treated as part of the lender’s collateral.

Wednesday, March 28, 2007
Judge Timothy J. Mahoney (Retired)