Robert Roser obtained a loan from Sovereign Bank which he promptly used to buy a car. Nineteen days later, Sovereign filed a lien with the state of Colorado. The bank expected that, with a perfected interest, it would have priority over everyone else.

Unknown to Sovereign Bank, Roser had declared bankruptcy only 12 days after he purchased the car. Later, the bankruptcy trustee argued that he had priority over Sovereign because the bankruptcy filing happened before Sovereign perfected its security interest. When the court found for the trustee,Sovereign Bank appealed.

Questions:

1. Did Sovereign Bank, a PMSI holder, obtain priority over the bankruptcy trustee?

2. What is the bank’s argument on why its lien has priority?

3. Does the court agree with the bank’s argument?