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The West Virginia Commercial Code defines a security agreement as an agreement that creates or provides for a security interest. W. Va. Code § 49-9-102(a)(76). No requirement exists that there be a separate written document labeled security agreement that has express language granting a security interest: once a debtor signs the financing statement the writing requirement is met, and the determination of whether the parties intended to create a security interest is an issue of fact that is garnered by reviewing a collection of documents, no one of which contains granting language, but which in the aggregate disclose an intent to grant a security interest in specific collateral.
The Debtor, Weir-Penn, Inc., borrowed money from the creditor, United Bank, Inc. The creditor allegedly took a security interest in the Debtor’s assets. The creditor filed a UCC-1 financing statement in 1997, but it cannot produce a copy of the security agreement purportedly executed by the debtor. In 2006, the debtor filed its Chapter 7 bankruptcy petition, and the assets subject to the creditor’s alleged security interest were sold by a trustee. The creditor filed a motion for relief from the automatic stay to repossess convenience store property and enforce its security rights under West Virginia law. According to the creditor, the absence of a separate, written security agreement signed by the debtor did not negate its security interest in the debtor’s assets.
Was the creditor entitled to relief from the automatic stay to recover the proceeds of the sale of the collateral securing its loan to the debtor?
The court held that the financing statement signed by the debtor met the basic W. Va. Code § 46-9-203(b)(3)(A) requirements that there be a writing, signed by the debtor, describing the collateral. The intent of the parties to create a security interest in the collateral listed on the financing statement was gleaned from a promissory note, which stated that the note was secured by the financing statement. Accordingly, the creditor was entitled to relief from the automatic stay to recover the proceeds of the sale of the collateral securing its loan to the debtor.