As creditors well know, a lien holder must be vigilant in both perfecting and maintaining the perfection and priority of its lien. But even a creditor that properly maintains its lien may find that enforcement of (or more specifically, failing to enforce) that lien can affect priority.
In a recent column, we examined a Second Circuit decision as one in a line of cases analyzing when a lien holder, by electing to participate in a debtor’s bankruptcy proceeding, risks extinguishing that lien.1 In another line of cases involving deposit accounts, courts in jurisdictions such as Florida, Illinois, Indiana, Nebraska, Oregon and Pennsylvania2 have been the site of an ongoing battle between creditors who garnish a deposit account to satisfy the debt of an obligor and the bank where such obligor’s account is maintained.
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