## Facts

- Weir-Penn, Inc. operated a convenience store in Weirton, West Virginia and borrowed $110,000 from United Bank in 1997, allegedly granting a security interest in business assets (including equipment, inventory, and accounts).
- United Bank filed a UCC-1 financing statement in 1997 describing the collateral.
- The loan was refinanced in 1999 and again in 2002; United Bank filed a UCC-3 continuation statement in 2002.
- United Bank could not locate the original standalone written security agreement and asserted it was likely destroyed during a flood affecting bank records.
- The debtor defaulted in January 2006; it filed Chapter 7 in February 2006.
- The Chapter 7 trustee sold the disputed assets post-petition for $21,000 and held the proceeds pending determination of lien rights.
- United Bank moved for relief from the automatic stay to enforce its asserted security rights; the trustee and debtor objected, contending the bank lacked an enforceable security interest without a produced security agreement.

## Issues

1. Whether United Bank had an enforceable security interest under W. Va. Code § 46-9-203(b) when it could not produce a separate signed “security agreement,” but had a signed financing statement and related loan documents describing collateral and reflecting a secured lending intent.
2. Whether, based on that enforceability determination, United Bank qualified as a secured creditor entitled to relief from the automatic stay.

## Decision

- The court held United Bank had an enforceable security interest in the debtor’s assets despite the missing standalone security agreement.
- The court found the debtor’s authentication requirement could be satisfied through a “collection of documents,” including a signed financing statement describing the collateral and associated loan documents evidencing intent to grant a security interest.
- The motion for relief from the automatic stay was granted, recognizing United Bank as a secured creditor with rights in the sale proceeds.

## Legal Principles

- Under W. Va. Code § 46-9-203(b), a security interest is enforceable against the debtor and third parties only if (1) value is given, (2) the debtor has rights in the collateral, and (3) the debtor authenticated a security agreement describing the collateral (or another statutory alternative applies).
- A “security agreement” is functionally defined as an agreement that creates or provides for a security interest; Article 9 does not require a single, formal document labeled “security agreement” or specific granting language.
- The authentication and description requirements may be satisfied by a composite or “collection of documents” approach, where multiple writings—viewed together—objectively show the parties’ intent to create a security interest in identified collateral.
- A debtor-signed financing statement describing collateral can satisfy the writing component, with related loan instruments and course of dealing supplying evidence of secured intent.

## Conclusion

The bankruptcy court ruled that United Bank established an enforceable Article 9 security interest through the debtor’s signed financing statement and related loan documents, so the bank was a secured creditor entitled to relief from the automatic stay and to assert lien rights in the trustee’s sale proceeds.


In re Weir-Penn, Inc., 344 B.R. 791 (Bankr. N.D.W. Va. 2006)