In re: Professional Technical Security Services, Inc. ( 2023 )


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  •                                                                                  FILED
    NOT FOR PUBLICATION                                     JUL 21 2023
    SUSAN M. SPRAUL, CLERK
    U.S. BKCY. APP. PANEL
    UNITED STATES BANKRUPTCY APPELLATE PANEL OF THE NINTH CIRCUIT
    OF THE NINTH CIRCUIT
    In re:                                             BAP No. NC-22-1220-CBG
    PROFESSIONAL TECHNICAL                             BAP No. NC-22-1228-CBG
    SECURITY SERVICES, INC.,                           (related appeals)
    Debtor.
    Bk. No. 3:22-bk-30062-HLB
    COMMITTEE OF CREDITORS
    HOLDING UNSECURED CLAIMS;
    BRINKMAN LAW GROUP, PC;
    DUNDON ADVISERS LLC,
    Appellants,                           MEMORANDUM*
    v.
    INTERNAL REVENUE SERVICE;
    JANINA M. HOSKINS, Chapter 7
    Trustee,
    Appellees.
    Appeal from the United States Bankruptcy Court
    for the Northern District of California
    Hannah L. Blumenstiel, Bankruptcy Judge, Presiding
    Before: CORBIT, BRAND, and GAN, Bankruptcy Judges.
    *
    This disposition is not appropriate for publication. Although it may be cited for
    whatever persuasive value it may have, see Fed. R. App. P. 32.1, it has no precedential
    value, see 9th Cir. BAP Rule 8024-1.
    INTRODUCTION
    The official unsecured creditor’s committee (“Committee”) appeals
    the bankruptcy court’s order overruling its objection to chapter 11 1 debtor
    Professional Technical Security Services Inc.’s (“PTSS”) motion to sell
    substantially all of its assets pursuant to § 363. The Committee also appeals
    the order approving a stipulation between PTSS and the U.S. Department
    of the Treasury, Internal Revenue Service (“IRS”) relating to the
    distribution of proceeds from the § 363 sale. Because we find no error, we
    AFFIRM.
    FACTS
    A.    History
    PTSS was a privately held San Francisco-based security company
    with approximately 580 employees. 2 PTSS provided personalized and
    professional unarmed security services in high-rise and commercial
    properties. PTSS’s failure to pay federal taxes for years caused it to incur
    significant tax debt and contributed to PTSS’s financial difficulties. Tax
    debt represented roughly 90% of PTSS’s outstanding debts.
    1   Unless specified otherwise, all chapter and section references are to the
    Bankruptcy Code, 
    11 U.S.C. §§ 101-1532
    , all “Rule” references are to the Federal Rules
    of Bankruptcy Procedure, and all “Cal. Com. Code” references are to the California
    Commercial Code.
    2 We exercise our discretion to take judicial notice of documents electronically
    filed in the main case and adversary proceeding. See Atwood v. Chase Manhattan Mortg.
    Co. (In re Atwood), 
    293 B.R. 227
    , 233 n.9 (9th Cir. BAP 2003).
    2
    B.    Chapter 11 bankruptcy
    1.    First day motions including motion to use cash collateral
    In February 2022, PTSS filed a voluntary chapter 11 petition with the
    intent to continue operating as a debtor-in-possession (“DIP”). As part of
    its first day motions, PTSS requested court authorization to use its cash
    collateral (the “Cash Collateral Motion”). The Cash Collateral Motion
    identified three entities that had a security interest in PTSS’s cash collateral:
    City National Bank; the IRS; and the Employment Development
    Department (collectively, the “Secured Parties”). To provide adequate
    protection, PTSS proposed to grant post-petition replacement liens to the
    Secured Parties in the “same amounts and priority as the Secured Parties’
    existing rights in the Cash Collateral (as may later be determined in this
    case).” The Cash Collateral Motion identified PTSS’s cash collateral as its
    checking and savings accounts and its accounts receivable.
    2.    Cash Collateral Motion approved
    On February 4, 2022, after a hearing on the first day motions, the
    bankruptcy court entered an interim cash collateral order. After another
    hearing on March 17th, the court entered a final order granting PTSS’s
    Cash Collateral Motion (“Final Cash Collateral Order”). The Final Cash
    Collateral Order stated in relevant part that in “consideration for the use of
    the Cash Collateral, the Secured Parties shall receive as adequate protection
    a post-petition replacement lien on all cash collateral generated post-
    petition, in the same order of priority as existed prepetition.” In May, the
    3
    Office of the United States Trustee for the Northern District of California
    appointed the Committee pursuant to § 1102(a).
    3.     Committee’s motion to reconsider the Final Cash Collateral
    Order denied
    On June 29, 2022, the Committee filed a motion to reconsider the
    Final Cash Collateral Order. Both PTSS and City National Bank filed
    responses. After a hearing, the bankruptcy court denied the Committee’s
    motion “for the reasons stated on the record.” The Committee did not
    appeal the denial order.
    C.    PTSS’s § 363 sale motion and IRS stipulation
    Despite PTSS’s efforts to reorganize, PTSS’s continued operations
    resulted in a “net loss of roughly $500,000 per month post-petition.” Based
    on its ongoing losses, PTSS decided to pursue a § 363 sale. Accordingly,
    PTSS sought and received approval from the bankruptcy court to employ
    B. Riley Advisory Services (“B. Riley”) to assist with the “§ 363 sale
    process.” Beginning in May, B. Riley implemented a comprehensive
    marketing strategy to sell PTSS’s assets. Despite “robust” marketing, PTSS
    received only one qualified bid. The Buyer 3 offered to purchase PTSS’s
    assets for $4.6 million (“Sale Proceeds”). 4
    3
    In the Sale Motion, PTSS identified the buyer as Paladin Security Group Ltd., a
    Canadian corporation with no connection to PTSS. However, just a week later, in the
    stipulation with the IRS and in the Order approving the sale motion, the buyer is
    identified as “PalAmerican Security (California) Inc.,” a Delaware corporation. There is
    no explanation for the change of the entity in the record provided.
    4 The terms of the sale indicated that the price represented approximately $1.6
    4
    1.     § 363 Sale Motion
    On September 12, 2022, PTSS filed a motion pursuant to § 363 seeking
    an order (1) authorizing the sale of substantially all of its assets free and
    clear of liens, (2) approving the assignment of certain executory contracts,
    and (3) approving a negotiated compromise with B. Riley for reduced fees
    (“Sale Motion”).
    PTSS acknowledged that Buyer’s offer was not sufficient to pay all
    secured claims, it nevertheless asserted that the sale was “based upon its
    sound business judgment,” and that Buyer’s offer was fair, reasonable, and
    in the creditors’ best interest. Buyer was a good faith purchaser within the
    meaning of § 363(m), according to PTSS, because the Buyer had no
    previous relationship with PTSS and the sale was negotiated at arm’s
    length by sophisticated parties.
    PTSS asserted that its assets should be sold free and clear of all liens
    pursuant to § 363(f) for three reasons. First, the sale satisfied § 363(f)(1)
    (“such a sale is permitted under applicable non-bankruptcy law”) because
    absent the sale, City National Bank would foreclose on its interest and the
    assets would be sold free and clear of junior liens. Second, the sale satisfied
    § 363(f)(2) (“the party asserting such a lien, claim or interest consents to
    such sale”) because PTSS anticipated that both City National Bank and the
    IRS would consent to the Sale. In a footnote, PTSS explained that it
    million for accounts receivable, $1.9 million for unbilled work-in-progress, and a $1.1
    million premium.
    5
    anticipated that the IRS would agree to the sale if the IRS was paid the
    balance of the Sale Proceeds remaining after paying City National Bank’s
    claim and paying $500,000 for administrative claims (“Estate Carveout”)
    and $200,000 for B. Riley’s reduced commission fees (“Commission
    Carveout”). Third, the sale satisfied § 363(f)(4) (“the interest is the subject
    of a bona fide dispute”) because a bona fide dispute existed as to the IRS’s
    claim based on the Committee’s motion to reconsider the Final Cash
    Collateral Order.
    2.    IRS Stipulation
    Following the Sale Motion, PTSS filed a proposed “Stipulation for
    Consent to Sale of Substantially All of the Debtor’s Assets Free and Clear of
    Liens; for Carveout from Sale Proceeds, and Payment of the Secured Claim
    to the IRS” (the “IRS Stipulation”). The IRS Stipulation provided for the
    distribution of Sale Proceeds in the following order: (1) City National
    Bank’s claim; (2) Estate and Commission Carveouts; and (3) all remaining
    Sale Proceeds to the IRS. The IRS Stipulation also provided that the IRS
    would continue to have a secured claim against PTSS’s assets that were not
    included in the § 363 sale to the “same extent, validity and priority as it had
    prior to PTSS’s bankruptcy filing.”
    3.    Committee’s limited objection to PTSS’s Sale Motion
    The Committee filed a limited opposition to the Sale Motion. The
    Committee complained that because PTSS’s principal, Sergio Reyes Jr., was
    co-liable for the tax debt, he had a conflict of interest and should not have
    6
    been the one to negotiate a deal with the IRS because it put him in a “better
    position than he would be absent the deal.”
    Without legal or evidentiary support, the Committee also asserted
    that the IRS had no lien on PTSS’s “cash, A/R, or [work-in-progress] by
    operation of California and Bankruptcy Law,” and therefore the Sale
    Proceeds were “traceable to property over which the IRS had no valid
    lien.” Finally, the Committee also asserted that the Carveouts were
    impermissible because it allowed those claimants to “step ahead of all
    other administrative claimholders.”
    4.     Sale Motion approved
    After two hearings and additional briefing, the bankruptcy court
    entered an order granting the Sale Motion (“Sale Order”).5
    The bankruptcy court determined that the § 363 sale should be
    approved and effective immediately after finding that: notice was proper
    and interested parties had the opportunity to be heard; compelling
    circumstances existed for the sale and the sale was a reasonable exercise of
    PTSS’s sound business judgment and in the best interest of the creditors;
    Buyer was a good faith purchaser; Buyer’s offer was the highest and best
    and provided fair and reasonable consideration for PTSS’s assets; Secured
    5  The Sale Order was captioned: Order Granting Debtor’s Motion for Entry of an
    Order (I) Authorizing the Sale of Substantially All of Debtor’s Assets Free and Clear of
    Liens (II) Approving the Assignment of Executory Contracts, (III) Allowing Payment of
    Compromised Fee to B. Riley Upon Closing and (IV) Granting Related Relief.
    7
    Creditors were adequately protected satisfying § 363(e); and the sale did
    not constitute a sub rosa chapter 11 plan.
    The bankruptcy court allowed PTSS to pay City National Bank’s
    claim from the Sale Proceeds, but ordered the remaining Sale Proceeds held
    “in trust . . . pending further orders of the court.”
    5.    Additional briefing and proceedings regarding distribution
    of remaining Sale Proceeds
    Both PTSS and the IRS filed additional briefing regarding the IRS’s
    right to the remaining Sale Proceeds. PTSS explained that, as adequate
    protection for the use of its cash collateral, it intended to maintain the IRS’s
    prepetition rights, which were all encompassing, because at the time the
    petition was filed, the IRS had a valid lien under the Federal Tax Lien Act
    on all of PTSS’s assets. Accordingly, the Final Cash Collateral Order
    provided the IRS with adequate protection in the form of a post-petition
    replacement lien to the same extent as the IRS held prepetition.
    In supplemental briefing, the IRS also noted that the Committee was
    merely repeating arguments previously raised and rejected by the
    bankruptcy court. Contrary to the Committee’s assertions, the IRS argued
    that the Final Cash Collateral Order granted the IRS a replacement lien in
    PTSS’s post-petition assets, such as PTSS’s “cash, accounts receivables, and
    work in progress, to the same extent as they existed on the petition date.”
    Furthermore, the Committee should have filed an adversary action if it
    wanted to challenge the validity and extent of the IRS’s lien.
    8
    In a sur-reply, the Committee argued that the definition of cash
    collateral in § 363(a) did not include all assets and specifically did not
    include accounts receivable or work-in-progress.
    6.    Bankruptcy court overrules the Committee’s limited
    opposition
    At a hearing on October 25, 2022, the bankruptcy court articulated
    several reasons why it was overruling the Committee’s limited opposition.
    First, the Committee had failed to appear at the hearing. Second, the
    Committee’s arguments were previously raised and rejected for the reasons
    previously articulated by the court “on the record.” Third, the Committee’s
    arguments lacked merit. The bankruptcy court reasoned that the IRS’s lien
    arose pursuant to 
    26 U.S.C. § 6321
     and attached to all PTSS’s prepetition
    assets. The IRS’s tax lien was not limited to property then held by PTSS but
    continued to attach to interests acquired by PTSS until the lien was
    satisfied. The court acknowledged that the automatic stay generally stops
    the attachment of liens to post-petition property. However, both cash
    collateral orders “clearly stated” that the Secured Parties would “receive, as
    adequate protection, a post-petition replacement lien on all cash collateral
    generated post-petition in the same order of priority as existed
    prepetition.” The bankruptcy court determined this language evidenced
    PTSS’s and the court’s intent to maintain the status quo of the IRS’s secured
    interest in PTSS’s assets post-petition. Furthermore, the bankruptcy court
    rejected the Committee’s argument that the holdings in United States v.
    9
    Fuller (In re Fuller), 
    134 B.R. 945
    , 946 (9th Cir. 1992) and United States v.
    McGugin (In re Braund), 
    423 F.2d 718
     (9th Cir. 1970) applied because those
    cases were chapter 7 cases and neither involved cash collateral orders.
    Following the hearing, the bankruptcy court entered an order
    overruling the Committee’s opposition “in its entirety. . . for the reasons
    stated on the record” (“Order Overruling Committee’s Opposition”).
    7.    Bankruptcy court approves IRS Stipulation
    On November 3, 2022, the bankruptcy court entered an order
    approving the IRS Stipulation (“Order Approving IRS Stipulation”). The
    order directed PTSS to “pay the balance of the Sale Proceeds arising from
    the Sale . . . in accordance with the terms of the IRS Stipulation.”
    The Committee timely appealed both the Order Overruling
    Committee’s Opposition and the Order Approving IRS Stipulation. 6
    JURISDICTION
    The bankruptcy court had jurisdiction under 
    28 U.S.C. § 1334
     and
    § 157(b)(2)(A), (M). We have jurisdiction under 
    28 U.S.C. § 158
    .
    ISSUES
    Did the bankruptcy court err in determining that the Sale Proceeds
    were cash collateral?
    6
    BAP No. NC-22-1220 is the appeal of the Order Overruling Committee’s
    Opposition and BAP No. NC-22-1228 is the appeal of the Order Approving IRS
    Stipulation.
    10
    Did the bankruptcy court abuse its discretion in approving the IRS
    Stipulation?
    STANDARDS OF REVIEW
    We review de novo the legal standard used by the trial judge to
    determine whether the funds in question are cash collateral. Zeeway Corp. v.
    Rio Salado Bank (In re Zeeway Corp.), 
    71 B.R. 210
    , 211 (9th Cir. BAP 1987).
    Under de novo review, “we consider a matter anew, as if no decision had
    been made previously.” Francis v. Wallace (In re Francis), 
    505 B.R. 914
    , 917
    (9th Cir. 2014). We review the bankruptcy court's fact findings underlying
    its legal conclusions for clear error. Bronitsky v. Bea (In re Bea), 
    533 B.R. 283
    ,
    285 (9th Cir. BAP 2015). We must affirm the bankruptcy court's fact
    findings unless those findings are illogical, implausible, or without support
    in inferences that may be drawn from the facts in the record. United States
    v. Hinkson, 
    585 F.3d 1247
    , 1262 (9th Cir. 2009) (en banc). A bankruptcy
    court's decisions to approve a sale of estate property under § 363 or to
    approve a compromise of a claim under Rule 9019 are reviewed for abuse
    of discretion. Debbie Reynolds Hotel & Casino, Inc. v. Calstar Corp. (In re
    Debbie Reynolds Hotel & Casino, Inc.), 
    255 F.3d 1061
    , 1065 (9th Cir. 2001). A
    bankruptcy court abuses its discretion if it applies an incorrect legal
    standard or its factual findings are illogical, implausible, or without
    support in the record. TrafficSchool.com, Inc. v. Edriver Inc., 
    653 F.3d 820
    , 832
    (9th Cir. 2011).
    11
    DISCUSSION
    The Committee argues that the bankruptcy court erred in both
    overruling its opposition to the § 363 sale and in approving the IRS
    Stipulation because the Sale Proceeds were not cash collateral as defined in
    § 363(a) and therefore, not subject to the IRS’s post-petition replacement
    lien. We disagree.
    A.    Federal tax liens
    Because PTSS was delinquent in paying its federal taxes, the IRS
    obtained a lien on all PTSS’s prepetition “property and rights to property,
    whether real or personal.” 
    26 U.S.C. § 6321
    . The broad statutory language
    “reveals on its face that Congress meant to reach every interest in property
    that a taxpayer might have.” United States v. Nat’l Bank of Com., 
    472 U.S. 713
    , 719-720 (1985) (citation omitted); see also Glass City Bank of Jeanette, Pa.,
    v. United States, 
    326 U.S. 265
    , 267 (1945) (“Stronger language could hardly
    have been selected to reveal a purpose to assure the collection of taxes.”);
    Drye v. United States, 
    528 U.S. 49
    , 56 (1999) (“When Congress so broadly
    uses the term ‘property,’ . . . the Legislature aims to reach every species of
    right or interest protected by law and having an exchangeable value.”).
    Importantly, the tax lien attached not only to property belonging to
    PTSS as of the date the lien arose, but also attached to property and rights
    to property PTSS thereafter acquired, at any time, during the life of the lien.
    
    26 U.S.C. § 6322
     (the lien “arise[s] at the time the assessment is made and
    shall continue until the liability for the amount so assessed . . . is satisfied”).
    12
    B.    The automatic stay, cash collateral, and adequate protection
    Despite the broad reach of federal tax liens, a bankruptcy petition
    generally works to prevent pre-petition liens and other obligations from
    attaching to property after the petition has been filed. § 362(a); In re Fuller,
    134 B.R. at 947. Under § 362, the stay is effective against all entities and any
    act. “Entities” encompasses governmental units and includes the IRS.
    United States v. Whiting Pools, Inc., 
    462 U.S. 198
    , 209 (1982). Accordingly,
    because PTSS filed a bankruptcy petition, the automatic stay prevented the
    IRS from enforcing its liens. However, the IRS’s “tax lien [was] not
    dissolved; nor is its status as a secured creditor destroyed.” 
    Id. at 211
    .
    Beyond impacting creditors, PTSS’s chapter 11 bankruptcy petition
    also halted PTSS’s ability to use its cash collateral in which the Secured
    Parties had an interest. A debtor-in-possession may use cash collateral,
    even in the ordinary course of business, only if the creditors consent or the
    court grants authorization. § 363(c)(2); § 1107(a). “There is an inherent
    tension between a debtor's need to use its cash to continue operating and a
    secured creditor's right to preserve its security interest in the debtor’s cash
    proceeds.” Sec. Leasing Partners, LP v. ProAlert, LLC (In re Proalert, LLC), 
    314 B.R. 436
    , 441 (9th Cir. BAP 2004) (cleaned up). If the court authorizes the
    use of cash collateral, that use must be conditioned as necessary to provide
    adequate protection of the creditor's interest in the collateral. § 363(e).
    Because it needed access to its cash collateral to continue operations,
    PTSS sought and obtained court authorization. As adequate protection,
    13
    PTSS provided the Secured Parties a “post-petition replacement lien on all
    cash collateral generated post-petition, in the same order of priority as
    existed prepetition.” The question is whether the post-petition replacement
    lien covers all of the Sale Proceeds.
    C.   The Committee has not demonstrated that the bankruptcy court
    erred in determining the Sale Proceeds qualified as cash collateral.
    Although the Committee appeals both the Order Overruling
    Committee’s Opposition and the Order Approving IRS Stipulation, it is
    evident from the briefing that the Committee is not objecting to the
    propriety of the § 363 sale, rather, the Committee is solely concerned with
    the distribution of Sale Proceeds to the IRS. The Committee argued to the
    bankruptcy court, and again on appeal, that the Sale Proceeds do not
    qualify as cash collateral and therefore, were not subject to the IRS’s post-
    petition replacement liens.
    Importantly, the Committee has the burden of filing an adequate
    record to allow review of the orders it appeals. Drysdale v. Educ. Credit
    Mgmt. Corp (In re Drysdale), 
    248 B.R. 386
    , 388 (9th Cir. BAP 2000). When
    findings of fact and conclusions of law are made orally on the record, a
    transcript of those findings is mandatory for appellate review. McCarthy v.
    Prince (In re McCarthy), 
    230 B.R. 414
    , 416-17 (9th Cir. BAP 1999); Fed. R.
    App. Proc. 10(b)(2) (“If the appellant intends to urge on appeal that a
    finding or conclusion is unsupported by the evidence or is contrary to the
    14
    evidence, the appellant shall include in the record a transcript of all
    evidence relevant to such finding or conclusion.”).
    PTSS‘s Cash Collateral Motion requested “post-petition replacement
    liens, in the same amounts and priority as the Secured Parties’ existing
    rights in the Cash Collateral (as may later be determined in this case).”
    Cash collateral is defined in § 363(a) as:
    cash, negotiable instruments, documents of title, securities,
    deposit accounts, or other cash equivalents whenever acquired
    in which the estate and an entity other than the estate have an
    interest and includes the proceeds, products, offspring, rents, or
    profits of property and the fees, charges, accounts or other
    payments for the use or occupancy of rooms and other public
    facilities in hotels, motels, or other lodging properties subject to
    a security interest as provided in section 552(b) of this title,
    whether existing before or after the commencement of a case
    under this title.
    The Sale Proceeds are arguably cash collateral because cash collateral
    by definition includes cash, cash equivalents, and proceeds. Furthermore, it
    appears that the bankruptcy court considered the definition of cash
    collateral, the breadth and intent of its cash collateral orders, and the
    Secured Parties’ rights in the cash collateral, several times and at several
    hearings. 7 Furthermore, the bankruptcy court’s rulings were based on the
    7
    The relevant hearings include: The February 4th hearing on first day motions,
    including the motion to use cash collateral; the March 17th hearing on the Final Cash
    Collateral Order; the August 4th hearing on the Committee’s motion to reconsider the
    Final Cash Collateral Order; the September 22nd and 28th hearings on PTSS’s Sale
    Motion, and the October 25th hearing on the Committee’s limited opposition to the Sale
    15
    “reasons stated on the record.” As such, the transcripts of those hearings
    are critical to our review.
    Despite the importance of the bankruptcy court’s oral findings, the
    Committee provided only the transcript of the October 25, 2022, hearing.
    The October 25th hearing addressed the Committee’s limited opposition to
    the Sale Motion. It was also the hearing at which the Committee failed to
    appear and prosecute its opposition. The bankruptcy court subsequently
    approved the IRS Stipulation and distribution of the Sale Proceeds to the
    IRS based on its finding that the post-petition replacement lien granted to
    the IRS by the Final Cash Collateral Order was broad enough to capture all
    of the Sale Proceeds.
    Because the Committee only provided the transcript of one hearing,
    this panel may presume nothing in the missing transcripts would help the
    Committee’s position on appeal. See U.S. Dep't of Educ. v. Carrion (In re
    Carrion), 
    601 B.R. 523
    , 525 n.3 (9th Cir. BAP 2019). Although our review of
    whether the Sale Proceeds are cash collateral is de novo, the panel reviews
    the bankruptcy court’s fact findings underlying its legal conclusions for
    clear error. From the record provided, we cannot determine that the
    bankruptcy court committed clear error in finding that PTSS intended to
    provide the IRS with a post-petition replacement lien broad enough to
    Motion.
    16
    capture the Sale Proceeds and that cash collateral included the Sale
    Proceeds.
    2.     The bankruptcy court did not abuse its discretion in
    approving the IRS Stipulation.
    The Committee argues on appeal that account receivables and work-
    in-progress are not cash collateral. Therefore, according to the Committee,
    the Sale Proceeds attributable to account receivables and work-in-progress
    are not subject to the IRS’s post-petition replacement lien.
    “The nature and extent of security interests are determined by state
    law.” Arnot v. Endresen (In re Endresen), 
    548 B.R. 258
    , 269 (9th Cir. BAP
    2016) (citation omitted). In California, accounts receivable are generally
    considered to be cash collateral. In re Anaheim Elec. Motor, Inc., 
    137 B.R. 791
    ,
    796 (Bankr. C.D. Cal. 1992) (account “[r]eceivable is considered to be ‘cash
    collateral’”). Similarly, the defined term cash collateral expressly
    encompasses proceeds and under California law, proceeds include
    whatever is acquired upon the sale, lease, license, exchange, or other
    disposition of collateral.8 
    Cal. Comm. Code § 9102
    (a)(64)(A).
    8  California Commercial Code § 9102 includes the following applicable
    definitions:
    (a)(9) defines “Cash proceeds” as “proceeds that are money, checks, deposit accounts,
    or the like.”
    (a)(12) defines “Collateral” as property subject to a security interest including:
    (A) Proceeds to which a security interest attaches.
    (B) Accounts, chattel paper, payment intangibles, and promissory notes that have
    been sold.
    ....
    17
    “The concept of proceeds is only implicated when one asset is
    disposed of and another is acquired as its substitute.” In re Delco Oil, Inc.,
    
    365 B.R. 246
    , 250 (Bankr. M.D. Fla. 2007) (cleaned up). The “term ‘proceeds’
    is to be given a broad and flexible interpretation . . .” Stodd v. Reynard (In re
    Shooting Star Enterprises, Inc.), 
    76 B.R. 154
    , 156 (9th Cir. BAP 1987), aff'd, 
    843 F.2d 1576
     (9th Cir. 1988); see also Am. Nat'l Bank v. Cloud, 
    201 Cal. App. 3d 766
    , 776 (1988) (“‘proceeds’ includes an account arising when the right to
    payment accrues”); Producers Cotton Oil Co. v. Amstar Corp., 
    197 Cal. App. 3d 638
    , 651 (Cal. Ct. App. 1988) (money from sale of collateral was
    proceeds even though never actually received by debtor but by third
    party); Unsecured Creditors Comm. v. Marepcon Fin. Corp. (In re Bumper Sales,
    Inc.), 
    907 F.2d 1430
    , 1437 (4th Cir. 1990) (secured creditor maintained
    security interest in post-petition proceeds generated from the sale of the
    debtor's prepetition inventory and collection of its accounts).
    In the instant case, the Sale Proceeds were acquired from the sale of
    PTSS’s assets. It is undisputed that the IRS had a lien on all PTSS’s
    prepetition assets. The Committee has not provided any evidence beyond
    mere supposition that the Sale Proceeds are not attributable to sale of
    (a)(64) defines “Proceeds,” as any of the following property:
    (A) Whatever is acquired upon the sale, lease, license, exchange, or other
    disposition of collateral.
    (B) Whatever is collected on, or distributed on account of, collateral.
    (C) Rights arising out of collateral.
    18
    prepetition cash collateral. Because there is a sufficient statutory and
    evidentiary basis for the bankruptcy court to find that the Sale Proceeds
    were attributable to prepetition cash collateral and therefore, subject to the
    IRS’s replacement lien, we cannot find the bankruptcy court erred in
    approving the IRS Stipulation and distributing the remaining Sale Proceeds
    to the IRS.
    D.    The Committee may not raise an issue for the first time on appeal.
    The Committee also argues on appeal that the bankruptcy court erred
    in approving the IRS Stipulation because it did not satisfy the Rule 9019(a)
    requirements. The Committee did not raise this issue before the
    bankruptcy court. Therefore, we need not consider it. Smith v. Marsh, 
    194 F.3d 1045
    , 1052 (9th Cir. 1999) (we generally will not consider arguments
    raised for the first time on appeal).
    CONCLUSION
    Based on the foregoing, we AFFIRM.
    19