Opinion ID: 755246
Heading Depth: 2
Heading Rank: 1

Heading: NBA's Claim to the Tax Refund.

Text: 20 We hold that the tax refund was not included amongst the prepetition general intangibles that were turned over to NBA pursuant to the Original Debtors' Reorganization Plan because NBA's security interest had not attached to the tax refund at the time the Plan was confirmed. Attachment can only occur in favor of the secured party once the debtor has rights in the collateral. See Food Services of America v. Royal Heights, Inc., 69 Wash.App. 784, 850 P.2d 585, 589 (1993), aff'd, 123 Wash.2d 779, 871 P.2d 590 (1994). The Original Debtors did not have rights in the tax refund until January 2, 1995, when the IRS determined the amount of the available tax refund. See Bank of the West v. Commercial Credit Fin. Serv., 852 F.2d 1162, 1166-67 (9th Cir.1988)(holding creditor with preexisting security interest in debtor's inventory and accounts did not acquire rights in inventory and accounts of business owned by debtor until the business had been transferred to the debtor). 21 NBA admits on appeal that on or about April 4, 1989, well before both UMSI's bankruptcy filing and the date the IRS issued the tax refunds to the Trustee, NBA's security interest in general intangibles lapsed due to nonrenewal of its financing statement at the Washington State Department of Licensing. It has been established that when a debtor files a new bankruptcy, after confirmation of a plan of reorganization in a prior bankruptcy, all claims are determined by their status at the time of the second filing. See In re Larsen, 59 F.3d 783, 786-87 (8th Cir.1995). Accordingly, we hold NBA cannot assert a priority claim against the tax refund by virtue of its prior security interest in the Original Debtors' general intangibles. An interest which lapses due to the failure to file a continuation statement becomes unperfected as against all other interests. See Morse Electro Products Corp. v. Beneficial Indus. Loan Co., 90 Wash.2d 195, 579 P.2d 1341, 1343 (1978). 22