Bankruptcy Court Unable to Determine on Summary Judgment Whether 810 ILCS 5/9-404(a)(2)’s Notice Was Sufficient.

In one of several adversary proceedings stemming from the same bankruptcy action, a bank lender, a grain company, and the bankruptcy trustee all claimed an interest in the proceeds of the debtor’s 2010 crops, which were being held by the grain company. All parties filed motions for summary judgment, but the court denied the motions, finding that the parties failed to adequately address the effect of 810 ILCS 5/9-404 on the grain company’s right to set off the amount owed to the company by the debtor against the amount the company owed the debtor for his grain. The court found that 810 ILCS 5/9-404 did apply and framed the issue for the parties. Under the statute, the company was the account debtor, the debtor was the assignor, and the bank was the assignee. The court was not able to determine on summary judgment whether the bank’s notice of security interest to the company was sufficient to satisfy 810 ILCS 5/9-404(a)(2)’s requirement. If it is found sufficient, the company will not be allowed to offset the debtor’s liability.  In re Duckworth, No. 10-83603, 2014 Bankr. LEXIS 704 (Bankr. C.D. Ill. Feb. 21, 2014).