Los Angeles County Treasurer & Tax Collector v. Mainline Equipment, Inc.

The County of Los Angeles may not enforce a lien on the personal property of a Chapter 11 debtor in possession when the County has failed to perfect the lien as against a bona fide purchaser. In this case, the Ninth Circuit rejected Mainline's argument that this appeal was mooted by the disbursal of Mainline's bankruptcy estate and dismissal of the Chapter 11 case; 11 U.S.C. 545(2) allows a Chapter 11 debtor in possession to set aside liens against its estate; under section 545(2), Mainline may avoid the County's liens; and Cty. of Humboldt v. Grover (In re Cummins), 656 F.2d 1262 (9th Cir. 1981), remained good law. View "Los Angeles County Treasurer & Tax Collector v. Mainline Equipment, Inc." on Justia Law