Summary of a Recent
Judicial
Development in
Bankruptcy
Proceeds of Production Contract Are Property
of the Estate
Patrick RobertsNational AgLaw Center Graduate Assistant
In In Re Jimmy C. Brown, No. 04-32128, 2005 Bankr. LEXIS 799 (Bankr. N.D. Ga. May 4, 2005), the United States Bankruptcy Court for the Middle District of Georgia determined that proceeds from a production contract were property of the estate because the contract language was an authorization directing payment and not an assignment of rights. Debtor Jimmy C. Brown and Pinnacle Bank executed a document entitled "assignment" that purportedly assigned Brown's right to proceeds from a poultry production contract to Pinnacle. See id. at *2. Brown later filed bankruptcy under Chapter 12. See id. at *2-3. Pinnacle moved to have the automatic stay lifted and argued that Brown was divested of any interest in the proceeds because of the assignment. See id. at *3-4. The court rejected this argument and found the contract lacked a present intent to assign and an intent to transfer any right, title or interest. See id. at *8-9. The court concluded that the contract was an authorization directing payment and therefore the proceeds from the contract were property of the estate. See id.
The case was decided on May 4, 2005; this summary was posted Oct. 5, 2005.