In re Lexington Hospitality Group, LLC

(Bankr. E.D. Ky. Nov. 1, 2011)

The bankruptcy court grants the debtor’s motion regarding cash collateral use, because the property to be used (hotel revenue and post-petition restaurant revenue) was not subject to a perfected security interest. The court determines that the hotel revenue paid in cash was not subject to the creditor’s mortgage because it was not rent. A hotel customer does not obtain a real property interest in a hotel room, but instead has a license. The cash paid for the room is thus personal property. The creditor was not in possession of the cash or deposit accounts, and thus the lien was not perfected as to that cash. Hotel revenue paid from credit cards constituted an obligation that would be a “payment intangible” under Article 9. The creditor’s financing statement failed to identify payment intangibles as collateral. While it referenced an “all asset” security agreement, that was insufficient to perfect a security interest in payment intangibles. The creditor does not have a lien on post-petition restaurant revenue pursuant to 11 U.S.C. § 552. Opinion below

Judge: Schaaf

Attorneys for Debtor: DelCotto Law Group PLLC, Laura Day DelCotto, Jamie L. Harris, Sara A. Johnston

Attorneys for Creditors: Dinsmore & Shohl LLP, Martin B. Tucker, Sarah S. Mattingly

2017-11-01 – in re lexington hospitality group

Author: Matt Lindblom

 

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