In re Seaway Express Corporation
United States Court of Appeals for the Ninth Circuit
912 F.2d 1125 (1990)
National Bank of Alaska (creditor) held a security interest in Seaway Express Corporation's (debtor) inventory, accounts receivable, and their proceeds; when one of Seaway's accounts receivable (owed by Anchorage Fairbanks Freight Service) went unpaid, Seaway settled by accepting a parcel of real property in exchange for closing the account, with the bank aware of but not formally consenting to or objecting to the settlement. The bank asked Seaway to record a deed on the property in the bank's favor, which Seaway refused; after Seaway's bankruptcy and sale of the real property, the bank claimed a priority interest in the sale proceeds as proceeds of the original account, but the bankruptcy trustee argued the bank never had a perfected interest in the real property itself.
Whether a secured creditor's perfected interest in an account receivable automatically continues, without further action, when the debtor exchanges that receivable for a different type of collateral, such as real property.