2009AP1007 BNP Paribas v. Olsen’s Mill, Inc.

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Debtor-Creditor
Secured interests; receivership

A sale of collateral free and clear of a security interest violated Chapter 128.

“[W]hen a lien given and accepted in good faith meets the conditions set forth in § 128.18(4), it is ‘not [] affected by’ the provisions of chapter 128. As one commentator has explained, “there is no question that a receiver’s ability to sell collateral depends on the secured creditor’s consent.” Paul A. Lucey, The Liquidating ‘Chapter 11’ in State Courts, Am. Bankr. Inst. J., Feb. 2001, at 12.

“Attorney Lucey compared the great power that bankruptcy trustees may wield over secured creditors with the lesser authority wielded by a receiver appointed under state law: A bankruptcy trustee can use collateral, even cash collateral, over the objection of a secured creditor if that creditor’s interests are adequately protected under [provisions of the bankruptcy code]. There is no comparable power under state receivership law. If the secured creditor in a receivership wants to take its ball and go home, the game is over. Similarly, while there may be a division of authority as to whether a bankruptcy court can authorize the sale of assets under [federal bankruptcy law] over the objection of a secured creditor, there is no question that a receiver’s ability to sell collateral depends on the secured creditor’s consent. Id. (emphasis added).”

“Wisconsin statutes, case law, and commentary are in accord. A secured creditor may withhold its consent to the sale of its collateral in a chapter 128 proceeding. If it does, the court cannot order the sale of the collateral free and clear of the secured creditor’s lien.” Reversed and Remanded.

2009AP1007 BNP Paribas v. Olsen’s Mill, Inc.

Bradley, J.

Attorneys: For Appellant: Williamson, Brady C., Jr., Madison; Nixon, Timothy F., Madison; Stadler, Katherine, Madison; Wheeler, Patricia L., Madison; For Respondent: Olejniczak, Thomas M., Green Bay; Swanson, Paul G., Oshkosh; Kelly, Colleen M., Green Bay

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