Last October we highlighted an important ruling issued in September 2019 by the Seventh Circuit in the bankruptcy proceeding of In re I80 Equipment, LLC. The Circuit Court in that case reversed a decision from the lower bankruptcy court and held that, under Article 9 of the UCC, a financing statement sufficiently indicates collateral even though it contains no actual collateral description but rather incorporates a collateral description by reference to an unattached security agreement. In re I80 Equip., LLC, 938 F.3d 866, 871-72 (7th Cir. 2019). We noted that this decision put the Seventh Circuit directly at odds with the First Circuit, which ruled to the contrary in January 2019 in the bankruptcy proceeding for Puerto Rico (In re Financial Oversight & Management Board).
On January 8, the bankruptcy trustee in the I80 Case appealed the Seventh Circuit ruling to the US Supreme Court by filing a petition for writ of certiorari. In its petition, the trustee argued that the Seventh Circuit decision contravened principles of federalism by failing to certify to the Illinois Supreme Court a case of first impression under state law and moreover had created a split among circuit courts. In re I80 Equip., LLC, No. 19-870 (petition for cert. filed Jan. 8, 2020). The trustee asserted that “[b]y eradicating the requirement that a financing statement contain a collateral description, the decision will greatly increase the time, cost and uncertainty of secured transactions, for a UCC search will never end with the financing statement.” Id. Court filings show that Respondent First Midwest Bank has waived its right to respond to the trustee’s petition.
(We note that Barbara Goodstein’s article for the New York Law Journal on this case was cited by petitioners in their petition for writ of certiorari.)