Opinion
Case Number 98-14126.
December 23, 1998
MEMORANDUM OPINION AND ORDER RE TRANSAMERICA'S MOTION FOR RELIEF FROM THE AUTOMATIC STAY
The Court conducted a hearing on Transamerica Business Credit Corporation's Motion for Relief from the Automatic Stay on November 25, 1998. FED. R. BANKR. P. 9014. Pursuant to 28 U.S.C. § 157(b)(2), this is a core proceeding. After reviewing the testimony from the hearing and the record as a whole, the Court makes the following findings of facts and conclusions of law. FED. R. BANKR P. 7052.
I. FINDINGS OF FACTS
On March 5, 1996, Transamerica Business Credit Corporation ("Transamerica") financed the purchase of five (5) Freightliner tractors for a business entity known as Trucks, Trains, and Planes ("TTP"). In return for this financing, Transamerica received a security interest in the five tractors. TTP served as a leasing company for tractors and trailers.
TTP is a separate business entity from the debtor, Wright Way Express ("Wright Way").
According to the testimony of a Transamerica employee, TTP immediately fell behind in its payments on the five tractors. As a result, Transamerica began collection efforts on TTP's account in April 1996. TTP's payments remained thirty days behind during the entire period of the security agreement.
On March 3, 1997, TT P leased the five tractors financed by Transamerica to Wright Way. The parties are in dispute as to whether or not Transamerica was informed of this lease; however, Wright Way did begin immediately making monthly payments on the tractors to Transamerica. Wright Way made some of these payments by checks which reflected its company name at the top. Despite this assumption of the security agreement obligation, Wright Way defaulted on the payments in October 1998. At the hearing on Transamerica's motion, Wright Way testified that it can begin making adequate protection payments to the movant in December 1998. Wright Way further testified that it will provide proof of insurance on the five tractors to Transamerica and will maintain insurance on the five tractors.
II. CONCLUSIONS OF LAW
Transamerica alleges that they were not privy to the lease between TTP and the debtor and should, therefore, not be required to continue doing business with Wright Way. Transamerica further alleges that the tractors are not property of the estate and the debtor has no authority to operate them as a result.
Property of the Estate is defined in § 541 of the Bankruptcy Code as "all legal and equitable interests of the debtor in property as of the commencement of the case." 11 U.S.C. § 541(a)(1). The debtor's lease of the five tractors from TTP plainly qualifies under this statutory section. The issue then is whether or not Transamerica had sufficient notice or knowledge of the lease to make them bound by it. The Court concludes that because Transamerica accepted Wright Way's checks as payment for TTP's account, Transamerica had sufficient knowledge of the lease. As a result of this conclusion, Transamerica's Motion for Relief from the Automatic Stay will be conditionally denied based on the debtor's promises to begin making adequate protection payments in December 1998 and to provide proof of insurance to Transamerica.
III. ORDER
It is therefore ORDERED that Transamerica Business Credit Corporation's Motion for Relief from the Automatic Stay is CONDITIONALLY DENIED based on the following two conditions:
(1) Wright Way Express will make the regular payments on all five of the Freightliner Tractors to Transamerica as adequate protection payments beginning in December 1998.
(2) Wright Way Express will maintain insurance on all five of the Freightliner Tractors throughout the entire pendency of this case and the security agreement with Transamerica.