In 2011, Airpro Mobile Air entered into a \($1,705,649.70\) loan agreement with Prosperity Bank’s predecessor. The loan was secured by Airpro’s assets, including its inventory, parts, accounts, equipment, and general intangibles.
In 2016, Airpro leased real property from H&H Properties. Airpro failed to pay rent, and H&H locked Airpro out of the premises. The collateral for Prosperity’s loan was locked in the premises. Airpro later defaulted on its loan with Prosperity, and Prosperity sought to foreclose on the collateral. H&H maintained it had a superior lien and denied Prosperity access to the collateral. Prosperity sued H&H for possession of the collateral and sought \($1,357,827.00\) in damages.
While Prosperity’s lawsuit was pending, it sold the collateral by private sale to the only bidder, Phoenix Mobile Air, for \($17,500,\) which Prosperity credited to the balance due on Airpro’s loan. A year later, Prosperity and H&H settled their lawsuit for \($30,000,\) which Prosperity credited to Airpro’s balance. Prosperity then sued Airpro for the deficiency of \($1,356,493.79,\) but Airpro countered that the collateral’s sale was commercially unreasonable.
1. If you were the judge deciding this case, would you grant Prosperity the full amount of the deficiency?
2. If you were the manager of Prosperity, what steps would you take to secure the rights of your company to Airpro’s assets?