CLC Equipment Co. v. Brewer (In Re Value-Added Communications, Inc.)

The CLC Equipment Company (CLC) leased a telephone processing system to Value-Added Communications, Inc. (VAC). VAC used that system to service the Minnesota state prisons under VAC’s contract with the state to operate a telephone system for the inmates. VAC granted CLC a security interest in VAC’s contract with Minnesota (the Site Leases), including the proceeds and revenues earned under that contract. In 1995, VAC filed a voluntary bankruptcy petition under Chapter 11. The bankruptcy court avoided CLC’s security interest, finding .that the financing statements were insufficient to perfect…