The receiver of a film animation studio brought a motion for directions regarding the distribution of approximately $1,150,000 in tax credits.
A priority dispute arose between the studio's secured creditor, who held a registered general security agreement, and several film producers who claimed the tax credits were assigned to them or held in trust pursuant to their production services agreements.
The court held that the producers' interests in the tax credits were, in substance, security interests under the Personal Property Security Act (PPSA).
Because the producers failed to register their interests under the PPSA, the secured creditor's prior registered security interest took priority.
The court declined to impose a constructive or Quistclose trust, noting that sophisticated commercial parties should not be relieved of their obligation to register security.