In re Tracy Broadcasting Corp.
United States Court of Appeals for the Tenth Circuit
696 F.3d 1051 (2012)
Tracy Broadcasting (debtor), an FCC license holder, granted Valley Bank (creditor) a security interest in its assets, including intangibles and proceeds, to secure a $1.5 million loan; after Tracy filed bankruptcy with no pending sale agreement for its valuable FCC license, competing creditor Spectrum Scan (which held a $1.4 million judgment against Tracy) argued that any future sale proceeds were post-filing property belonging to it, while Valley Bank argued its pre-filing security interest already covered those proceeds. The bankruptcy court held Tracy's mere pre-sale-agreement interest in future proceeds wasn't sufficient collateral for Valley Bank, and the district court affirmed.
May holders of government-issued licenses with rights to the proceeds of a sale of those licenses grant a security interest in that right to the proceeds of a future sale?