National Peregrine, Inc. v.
Capitol Federal Savings & Loan Association (In re Peregrine
Entertainment, Ltd.) case brief summary
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116 B.R. 194
CASE SYNOPSIS: Appellant
debtor in possession sought review of the judgment of the Federal
Bankruptcy Court, which granted appellee savings and loan
association's cross-motion for summary judgment on the question of
whether appellee had a valid security interest in appellant's film
library in appellant's bankruptcy action under Chapter 11.
FACTS: Appellee extended to appellant's predecessor a line of credit, which was secured by the film library of appellant's predecessor. Appellee filed its financing statements in the applicable state offices, but appellee did not record its security interest in the United States Copyright Office. Upon filing a petition in bankruptcy under Chapter 11, appellant filed an action against appellee, contending that its security interests in the film library were unperfected. The parties filed cross-motions for summary judgment. The bankruptcy court granted appellee's motion.
HOLDING:
On appeal, the appellate court reversed the bankruptcy court's judgment and remanded the action, reasoning that the federal Copyright Act's recording provisions supported the view that federal law preempted state methods of perfecting security interests in copyrights and related accounts receivable.
ANALYSIS:
The appellate court further determined that pursuant to 17 U.S.C.S. § 205(d), appellant was a transferee who took in good faith and, therefore, as a debtor in possession could avoid appellee's unperfected interest and preserve it for the benefit of the bankruptcy estate.
CONCLUSION: The court reversed the bankruptcy court's judgment and remanded the action for a determination of which movies in appellant's library were the subject of valid copyrights and for a determination of the status of appellee's security interest in the movies and appellant's other property, and the court gave appellant avoidance powers over any unperfected interests.
FACTS: Appellee extended to appellant's predecessor a line of credit, which was secured by the film library of appellant's predecessor. Appellee filed its financing statements in the applicable state offices, but appellee did not record its security interest in the United States Copyright Office. Upon filing a petition in bankruptcy under Chapter 11, appellant filed an action against appellee, contending that its security interests in the film library were unperfected. The parties filed cross-motions for summary judgment. The bankruptcy court granted appellee's motion.
HOLDING:
On appeal, the appellate court reversed the bankruptcy court's judgment and remanded the action, reasoning that the federal Copyright Act's recording provisions supported the view that federal law preempted state methods of perfecting security interests in copyrights and related accounts receivable.
ANALYSIS:
The appellate court further determined that pursuant to 17 U.S.C.S. § 205(d), appellant was a transferee who took in good faith and, therefore, as a debtor in possession could avoid appellee's unperfected interest and preserve it for the benefit of the bankruptcy estate.
CONCLUSION: The court reversed the bankruptcy court's judgment and remanded the action for a determination of which movies in appellant's library were the subject of valid copyrights and for a determination of the status of appellee's security interest in the movies and appellant's other property, and the court gave appellant avoidance powers over any unperfected interests.
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