In re HART SKI MFG. CO., INC., Debtor; BEATRICE FOODS CO., Plaintiff v. HART SKI MFG. CO., INC., Aetna Business Credit Inc., and the Unsecured Creditors' Committee of Hart Ski Mfg. Co., Inc., Defendants, 5 B.R. 734

Summary

The secured creditor originally owned the debt and sold it in 1976. As part of the purchase price, the secured creditor received a note secured by the inventory and accounts receivable of the debtor. In order to obtain financing for the new owners, the secured creditor agreed to subordinate its claims to the financing company and agreed that its interests were subordinate to the financing company's for the debtor's indebtedness until the financing company's indebtedness was paid. When the debtor filed bankruptcy, the secured creditor sought protection or a lifting of the automatic stay. The debtor owed the financing company over $ 2 million. The court denied the financing company's motion for summary judgment, holding that 11 U.S.C.S. § 510(a), which provided for the enforceability of subordination agreements, allowed the agreement to be enforced but did not allow the creditors to alter the bankruptcy laws. There was no prejudice to the financing company because any money collected by ...