Note by Marc Winsberg
Energy Contractors, Inc. (Energy Contractors) was domiciled in East Baton Rouge Parish and conducted business in St. Landry Parish. In August 1981 Mercantile Texas Credit Corporation (Mercantile) executed a loan and security agreement with Energy Contractors. This agreement assigned all of Energy Contractor's currently existing and future accounts receivable to Mercantile as security for the loan. Mercantile filed two statements of assignment of accounts receivable. One statement, filed in East Baton Rouge Parish, listed Energy Contractor's place of business as Baton Rouge, Louisiana. The second statement, filed in St. Landry Parish, listed Energy Contractor's place of business as located in that parish. After Energy Contractors filed for bankruptcy, Mercantile asserted that its general assignment of Energy Contractor's accounts receivable was a basis for relief from the bankruptcy stay imposed on Energy Contractor's assets. The Bankruptcy Court for the Middle District of Louisiana denied Mercantile's motion for relief. The court held that Mercantile's security interest was invalid and ineffective against third parties under Louisiana law because Mercantile failed to file a proper statement of assignment of accounts receivable and failed to create a valid written general assignment. In re Energy Contractors, Inc., 45 Bankr. 181 (Bankr. M.D. La. 1984).
About the Author
Marc Winsberg.
Citation
60 Tul. L. Rev. 687 (1986)