[CLBS] If creditor has a UCC-1 against an entity, can it offset from accounts in principals' names?

[Randy French]

Holly,

Legally, the bank can only offset against parties that are legally liable on
the debt, not principals or agents or affiliates.  It seems surprising that
a bank would not have the personal guarantees of all principals. It might
also have loans to the affiliates and perhaps some agreements that broadly
construed give it an argument that it can act.

I would advise the client and its principals and affiliates to move all
funds away from the bank that Debtor owes money to.  Legally or not, once
the Bank grabs the money then all of the other parties are, what is the
legal term, "screwed!"


Thanks.
Randy French

Law Office of Randal J. French, P.C.
Attorneys at Law
AP.O. Box 836 PBoise, ID 83701 B(208) 859-6881  

IMPORTANT NOTICE: This communication, including any attachments, may contain
information that may be confidential or privileged and is intended solely
for the entity or individual to whom it is addressed. If you are NOT the
intended recipient, you must delete this message and attachments and are
hereby notified that any disclosure, copying, or distribution of this
message is strictly prohibited. Nothing in this email, including any
attachment, is to be a legally binding signature.



-----Original Message-----
From: CLBS [mailto:clbs-bounces at admws.idaho.gov] On Behalf Of Holly Roark
Sent: Wednesday, October 05, 2016 4:53 PM
To: clbs at admws.idaho.gov
Subject: [CLBS] If creditor has a UCC-1 against an entity, can it offset
from accounts in principals' names?

Bank has a blanket lien on all assets and filed a UCC-1 against Debtor.
Debtor closed bank account with Bank.  UCC-1 statement only names Debtor and
says nothing about any other entities or principals of borrower/debtor.
Debtor has accounts at Bank in the name of the principals of Debtor, and in
the name of other entities that the principals own. May Bank legally offset
any sums owed by Debtor from the other accounts in the name of the
principals and in the name of the other entities that the principals own?  I
need to talk to bank about a cash collateral issue before we file CH 11, but
I don't want to set Bank loose on the other accounts by having this
discussion.  Currently, Debtor is not in default to Bank.

 

Best regards,

HOLLY ROARK

Attorney at Law 

Certified Bankruptcy Specialist -

By the State Bar of California Board of Legal Specialization

 

ROARK LAW OFFICES

950 Bannock Street | Suite 1100 | Boise, Idaho 83702

Phone:  (208) 536-3638

Fax: (310) 553-2601

E-mail:   <mailto:holly at roarklawboise.com> holly at roarklawboise.com Website:
<http://www.roarklawboise.com/> www.roarklawboise.com

 

*This communication does not create an attorney-client relationship.

Unless you have signed a retainer agreement with Roark Law Offices, this 

communication may not be private or privileged.

 

_______________________________________________
CLBS mailing list
CLBS at admws.idaho.gov
http://admws.idaho.gov/mailman/listinfo/clbs