When a vendor reserves title to financed goods before they are paid in full, a lender’s claim of a security interest in such goods, through its borrower’s interest therein, may be unsuccessful.
In Wingspire Equipment Finance LLC v. E-Crane International USA Inc. (In re Cool Springs) (Adv. Pro. No. 23-50395 (MFW)) (Jan. 2, 2026), the United States Bankruptcy Court for the District of Delaware closed a long-running equipment-financing dispute with a practical warning for lenders: Funding a borrower’s purchase of equipment does not, by itself, give the lender an interest in the equipment or a direct claim against the vendor. The decisions in the Wingspire case are a reminder that an equipment lender needs a documented path to title, control or other enforceable collateral rights to ensure it has a path to recovery in the event of a bankruptcy scenario.
Background
Prior to filing for bankruptcy, the debtor entered into a master lease agreement with Wingspire Equipment Finance LLC, pursuant to which Wingspire agreed to finance the debtor’s purchase of equipment and assigned to Wingspire “all of [the debtor’s] rights and interests” in such equipment. The debtor later contracted with E-Crane International USA Inc. (ECI) to construct two cranes with a purchase price of approximately $3.3 million, which Wingspire agreed to finance under the master lease. Wingspire and the debtor arranged to have ECI bill Wingspire directly for the progress payments. As of the debtor‘s bankruptcy filing in September 2022, Wingspire had paid ECI approximately $1.5 million on the debtor’s behalf, one crane had been completed but not delivered to the debtor, and the other crane was still in production. Under ECI’s general conditions of sale, ECI retained title to the cranes until they were paid in full. In connection with its bankruptcy case, the debtor chose to reject the contract with ECI and abandon its interest in the equipment, but Wingspire was permitted to pursue claims against ECI.
In June 2023, Wingspire commenced an adversary proceeding against ECI asserting a number of claims and seeking to recover the progress payments and claiming an interest in the cranes. By opinion dated February 1, 2024, the Bankruptcy Court dismissed most of Wingspire’s claims but allowed the breach of contract claim to proceed.
Relying on various evidence, including the master lease, as proof of an alleged agreement, Wingspire argued that it had an express enforceable contract with ECI under which ECI agreed to sell the cranes to Wingspire in exchange for the progress payments. ECI contended that no such agreement existed, that it had never agreed to sell the cranes to Wingspire, and that Wingspire was merely financing the debtor’s equipment purchase.
The Court’s Rulings
In a 2025 opinion, the court systematically rejected Wingspire’s arguments. It found that none of the evidence presented by Wingspire established a contract between ECI and Wingspire, and that the master lease was an agreement only between Wingspire and the debtor.
Critically, the court found that, because ECI retained title to the cranes until they were paid in full, which didn’t happen before the debtor’s bankruptcy case, the debtor didn’t acquire any right, title or interest in the cranes that it could assign to Wingspire under the master lease. Under Section 9-203 of the Uniform Commercial Code (UCC), except where an express agreement postpones attachment, a security interest in equipment attaches when it becomes enforceable against the debtor with respect to that equipment. Enforceability requires, among other things, that the debtor has rights in the equipment or the power to transfer rights in it to the secured party. Although Wingspire had advanced funds pursuant to the master lease, since the master lease assignment of “all rights and interests” could not transfer rights the debtor did not actually possess, Wingspire’s security interest in the cranes never attached to the equipment, regardless of the progress payments made by Wingspire, and Wingspire did not have an enforceable security interest in the cranes.
The court also rejected Wingspire’s argument that the progress payments and ECI’s acceptance of those payments evidenced an agreement between the parties, concluding instead that the payments reflected only that Wingspire was paying ECI on the debtor’s behalf. The fact that Wingspire filed a proof of claim in the debtor’s bankruptcy case seeking repayment of the funds advanced on the debtor’s behalf was used by the court to further support its conclusion. Based on the “objective manifestations” of the parties and the surrounding circumstances, the court concluded that there was “no mutual assent or meeting of the minds” and therefore “no enforceable contract” between Wingspire and ECI. Following this decision, Wingspire filed a motion for reconsideration in an effort to preserve a route of recovery against ECI.
The court’s opinion, issued on January 2, 2026, denied Wingspire’s motion to reconsider the earlier dismissal of its unjust enrichment and constructive trust claims. Wingspire argued that, because the court had determined that no contract existed between Wingspire and ECI, it should be permitted to pursue an equitable remedy under Delaware law. The court rejected this argument, clarifying that its earlier dismissal of the unjust enrichment claims was not based solely on the existence of a contract but rather on the absence of any causal relationship between Wingspire’s alleged impoverishment and ECI’s alleged enrichment. The court reaffirmed its prior finding that the payments made by Wingspire to ECI were “in essence a loan from Wingspire to the [d]ebtor” and that, “[a]s a general proposition, once loan funds are extended to a debtor, those funds are property of the debtor, and the lender has no claim of ownership to those funds.” Because Wingspire had not demonstrated a change in controlling law, newly discovered evidence or a clear error of law or fact, the court denied the motion for reconsideration, allowing ECI to retain both title to the cranes, unencumbered by any security interest, and the progress payments it had already received from Wingspire.
Conclusion
The decisions in Wingspire serve as an important reminder to lenders that security interests need to be properly documented and contractual rights need to be closely examined at the commencement of equipment finance transactions to ensure a lender obtains the benefit of its bargain. Under the UCC, a secured creditor’s security interest only attaches when a debtor has rights in personal property. When a vendor reserves title to financed goods before they are paid in full, a lender’s claim of a security interest in such goods, through its borrower’s interest therein, may be unsuccessful. Additionally, merely directing a borrower’s vendor to bill the lender, with the lender making progress payments on a borrower’s behalf, may not create a contractual relationship between the vendor and lender sufficient to give the lender recourse against the vendor. Accordingly, secured lenders should ensure that their financing arrangements include contractual provisions that conform with the requirements of the UCC in terms of creating and perfecting security interests, or give them a right of recovery against third parties, as necessary.
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