Agricultural Lien Not Lost By Unauthorized Disposition of Collateral

The issue in Brooks v. Strategic Funding Source, Inc., 2020 Bankr. LEXIS 2187 (C.D. IL August 14, 2020) was whether a bank lender lost its claim to the proceeds of its collateral as a result of the debtor having sold the collateral to a factor without the bank’s knowledge. The court ruled in favor of the bank.

The debtors were engaged in farming and, beginning in 2012, financed their operations by means of loans from First Midwest Bank. At that time, the debtors executed a security …