Debtor May Have Been Injured by Creditor Sales of Collateral Without Court Approval.

The debtor filed Chapter 12 bankruptcy and a bank, as a creditor, held security interests in the debtor’s livestock, crops and equipment.  The bank sought relief from the automatic stay, which was granted.  The debtor, with the bank’s permission, sold the livestock and equipment to a third party with the sale proceeds paying off the secured debt.  A similar arrangement was engaged in by another creditor with the sale being to the same buyer.  The bankruptcy court did not grant prior approval of the sales.  The debtor sought to avoid the sales under 11 U.S.C. Sec. 549, and the buyer motioned for summary judgment on the basis that the debtor lacked standing to sue for lack of injury insomuch as the debtor benefitted from the sales.  The court allowed the debtor’s case to proceed on the basis that the buyer had not completely showed that the sales didn’t injure the debtor or the debtor’s bankruptcy estate.  In re Johnsman Limited Partnership, No. 12-33368, 2015 Bankr. LEXIS 2702 (Bankr. N.D. Ohio Aug. 13, 2015).

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