Oregon law clearly gives Wells Fargo Bank the right to repossess collateral to make good on a loan that Country Coach can’t repay, the bank’s lawyers argued in a legal brief filed Thursday (Feb. 5).
Further, reports the Register-Guard, case law holds that a judge has no choice but to order Country Coach to relinquish its assets to the bank, the lawyers said.
Wells Fargo and Country Coach both agree that the privately held Junction City RV maker is in default on an $8 million loan balance.
Wells Fargo sued Country Coach to enforce the terms of its loan agreement, which the bank claims gives it the right to repossess and liquidate Country Coach’s personal property assets. Those assets include almost everything that is not real property — including cash, completed motor coaches, works in progress, raw materials, contract rights, accounts receivable and factory machinery. Wells Fargo lawyers said they estimate the value of the collateral at $8.5 million.
After a two-hour hearing Wednesday in U.S. District Court in Eugene, Magistrate Thomas Coffin told Wells Fargo lawyers to file a brief on their arguments by the close of business Thursday. Country Coach and other creditors have until the end of business Friday to respond. Coffin said he’ll call another hearing or render a decision early next week.
The Register-Guard reported that in its brief, Wells Fargo lawyers said a secured creditor’s right to repossess its collateral when a debtor defaults “is long-standing and widely recognized in Oregon.”
They cited a 1981 case, Aetna Business Credit vs. Davis, in which the Oregon Supreme Court ruled that when a secured creditor has established default on a contract providing for immediate possession of collateral upon default, the trial court has “no discretion, but in accordance with the security agreement … must order the creditor to be put in immediate possession.”
If Wells Fargo is not allowed to take possession of its collateral, “it would disrupt the reliability of commercial transactions that has been a cornerstone of American business,” the bank’s lawyers said.