Opinion ID: 475337
Heading Depth: 2
Heading Rank: 3

Heading: Same Class

Text: 26 Continental Bank's final argument is that Oklahoma law requires that loans made pursuant to a future advance clause must be of the same class if secured by the same collateral. It insists that the December debt is not of the same class as the June loan and, therefore, is not secured by the oil and gas mortgages. In Security Nat. Bank v. Dentsply Professional, 617 P.2d 1340, 1345 (Okla.1980), the Oklahoma court recognized the rule that whether future liabilities fall within a security agreement's future-advances clause is whether the debts are 'of the same class as the primary obligation'.... Continental Bank contends that the June loan and the December loan are not of the same class because the June loan was used for completion costs and working capital and the December loan was for acreage acquisition. The bankruptcy court found that Continental Resources was an oil and gas exploration company, that the loans were made to fund the company's business operations, that they shared a common purpose, and concluded that they are not so wholly unrelated so as to be considered not of the 'same class.'  43 Bankr. at 663. We find no error with these findings and conclusion. 27 Different loans intended to provide a debtor with working capital are of the same class. Dentsply, 617 P.2d at 1346. Working capital is a general term which refers to funds used to meet current obligations as they arise to carry on the purposes of the business. We agree with the bankruptcy court that the June loan may be classified generally as working capital. The December loan also may be categorized as working capital because of the nature of Continental Resources' business, i.e., oil and gas exploration and development. Record vol. I at 37. In the context of this case, funds used for maintaining an acreage inventory are as much working capital as funds used for completion activities. The bankruptcy court, therefore, did not err in its holding on this issue. 28 Accordingly, the district court's order affirming the bankruptcy court's decision is AFFIRMED.