## Facts

- Old Colony, LLC operated a resort hotel in Teton Village, Wyoming.
- Wells Fargo Bank, N.A. was the hotel’s secured lender under loan documents granting a lien on the hotel’s real property and related collateral, including “rents” and “revenues.”
- Wells Fargo recorded its mortgage/deed of trust in Wyoming, perfecting its real-property lien.
- Wells Fargo did not file a UCC financing statement to perfect a security interest in certain personal property, including the hotel’s room revenue if characterized as “accounts” or “general intangibles.”
- Old Colony filed Chapter 11 in the U.S. Bankruptcy Court for the District of Massachusetts and continued operating the hotel and using operating receipts.
- Wells Fargo sought a ruling that hotel room revenues were “rents” covered by its mortgage and therefore constituted cash collateral; Old Colony contended the revenues were personal-property “accounts” requiring Article 9 perfection.

## Issues

1. Under Wyoming law, are hotel room revenues “rents” of real property covered and perfected by a recorded mortgage, or personal property (e.g., “accounts”) governed by UCC Article 9?
2. If the revenues are personal property, did Wells Fargo’s lack of Article 9 perfection leave it without a perfected lien enforceable against the bankruptcy estate, defeating its cash-collateral claim?

## Decision

- The court held that hotel room revenues were not real-property “rents” under Wyoming law, but personal property arising from a guest’s license and related services.
- Because the revenues were personal property, UCC Article 9 governed perfection of any security interest in them.
- Wells Fargo had not perfected an Article 9 security interest in the room revenues and therefore did not hold a perfected lien in those revenues as against the bankruptcy estate.
- The court denied Wells Fargo’s requested relief to the extent it depended on treating room revenues as perfected “rents” and cash collateral.

## Legal Principles

- Hotel guests generally receive a license to occupy, not a leasehold estate; payments for hotel rooms are typically service- and license-based rather than tenant rent.
- Hotel room revenues are commonly characterized as personal-property payment rights (e.g., “accounts”) rather than real-property rents.
- Recording a mortgage in land records perfects interests in real property but does not, by itself, perfect a security interest in personal-property collateral governed by UCC Article 9.
- To perfect a security interest in accounts and similar personal property, a secured party generally must file an appropriate UCC financing statement; an unperfected interest is not enforceable against the debtor-in-possession standing in the position of a hypothetical lien creditor.

## Conclusion

The bankruptcy court determined that the hotel’s room revenues were Article 9 personal-property “accounts,” not mortgage-perfectible real-property rents, and that the lender’s failure to perfect under Article 9 prevented it from claiming those revenues as cash collateral on the theory advanced.


In re Old Colony, LLC, 476 B.R. 1 (Bankr. D. Mass. 2012)