Hartford Wins Bankruptcy Appeal Over Contractor Collateral Split

A North Dakota bankruptcy court failed to consider the terms of an intercreditor agreement involving Hartford Accident and Indemnity Co. when considering the distribution of funds from a bankrupt general contractor’s bank accounts, a federal appeals court said.

North Dakota lender Capital Credit Union shouldn’t have been permitted the right to set off its loan debt to Chapter 7 debtor Pro-Mark Services Inc. without considering the bank’s pre-existing agreement to split collateral proceeds with Hartford, the US Bankruptcy Appellate Panel for the Eighth Circuit ruled Monday.

By failing to consider the intercreditor arrangement that CCU and Hartford established when Pro-Mark ...