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In re William Bruce Hope and Lori Lynn Hope

Bankr. No.: 
03-30093
Chapter: 
7
Date of Decision: 
January 15, 2004
Issue: 
Whether certain goods placed in inventory under "consignment" at Debtors’ store were property of the estate the case trustee could sell?
Ruling: 
None of the consigned goods were property of the bankruptcy estate the trustee could sell. Debtor did not meet the definition of a merchant as required for the consignments to fall under the U.C.C. Thus, consignors did not have to perfect their consignment interest in the goods by filing and giving notice their goods had been placed in Debtor’s store’s inventory. Also, many of the consignments did not meet the U.C.C. definition of a consignment because the goods had a value of less than $1,000 when delivered to the store. Since the U.C.C. did not govern the consignments, general bailment law in South Dakota did. Under that law, Debtor did not have an interest in the consigned goods to which the secured claims of Debtors’ creditors or the case trustee could attach. The consigned goods remained outside the bankruptcy estate and had to be returned to the consignors.
Full Bankruptcy Court Decision: