Opinion
No. 78-24 T
August 7, 1980
Former Bankruptcy Act — Preferences — Secured Creditors — Possession of Collateral
A stock transfer within four months of bankruptcy will not be set aside as a voidable preference under Section 60b of the Bankruptcy Act if the or editor is secured at the time of the sale. In this case, a valid "oral" security agreement was created between the parties upon delivery of the bankrupt's stock to the creditor more than eight, months before the involuntary petition in bankruptcy was filed, See Sec. 60b at ¶ 2562 and Sec. 547(b) at ¶ 9529.
[Digest of Opinion]
The bankrupt delivered shares of stock to the creditor bank which were placed unendorsed in their vault. A "receipt for the collateral" was given to the bankrupt.
Approximately five months later, within four months of the involuntary petition in bankruptcy filed against him, the bankrupt sold the shares of stock to a third party. The creditor received all of the proceeds and in return released the stock to the purchaser.
The trustee contended that no written security agreement existed between the bankrupt and the creditor and if no writing was required, an agreement must exist orally. The creditor, however, took the position that although Fla. Stat. § 679.203(1)(a) generally created a statute of frauds for security agreements, no writing was required for a security agreement to be valid in the case where the creditor was attempting to perfect by possession of the collateral.
A close examination of the statutory language concerning the requirements of security agreements showed that Fla. Stat. § 679.203(1)(a) (1979) provided for a writing in non-possessory cases. However, in the case of possession a written agreement was not required.
After considering the trustee evidence offered by the trustee that the delivery of stock appeared to have been an effort by the bankrupt to placate the creditor, the court found that a bona fide oral security agreement existed between the parties created upon delivery of the bankrupt's stock to the creditor-bank. Accordingly, the creditor, being secured, could not have received a preference within the meaning of Section 60 of the Bankruptcy Act.