Havee v. Belk (In re Belk)
Docket: Bankruptcy No. 82-00354-BKC-JAG; Adv. No. 82-0486-BKC-JAG-A
Court: United States Bankruptcy Court, S.D. Florida.; December 23, 1982; Us Bankruptcy; United States Bankruptcy Court
The court addressed an adversary proceeding initiated by the trustee for debtor William Henry Belk Jr. to determine whether specific property constitutes estate property, to avoid a judicial lien as a preference, and to seek turnover. The property in question involves two obligations owed by Irwin Belk to his brother, the debtor, which Union Bank of Bavaria acquired through supplementary proceedings. The bank counterclaimed for termination of the automatic stay. The primary legal issue is whether supplementary proceedings initiated in North Carolina outside the preference period, but concluded within it, create a lien that a bankruptcy trustee cannot avoid. The relevant timeline includes a judgment against William Henry Belk on October 22, 1981, and the commencement of supplementary proceedings on November 25, 1981. Irwin Belk was compelled to respond to inquiries regarding his debts on December 8, 1981, with a notice of levy issued on December 11, 1981. The preference period began on December 1, 1981, following the debtor's bankruptcy filing on March 1, 1982. The court found that while recording alone does not create a lien on personal property, the bank's argument that an equitable lien arises upon the initiation of supplementary proceedings is valid. North Carolina law (N.C. Gen. Stat. 1-313) indicates that a lien on personal property does not exist until a levy occurs. However, the court noted that supplementary proceedings are a successor to the creditor’s bill, suggesting that a lien could arise upon the commencement of these proceedings, particularly concerning intangible personal property. Citing various North Carolina case law, the court concluded that an equitable lien is indeed created by the commencement of supplementary proceedings, leading to the ruling in favor of Union Bank. A final judgment reflecting these findings and conclusions is to be entered.