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The 2010 Amendments to Article
9 (Secured Transactions) of the Uniform Commercial Code modify or clarify
certain key provisions of the statute. One of the provisions so modified
involves changes of the debtor's location. The 2010 Amendments do not change
provisions regarding the debtor's location but they do clarify issues
surrounding the continued effectiveness of a financing statement filed in State
A after a debtor has moved to State B.
The suggested effective date of
July 1, 2013, for the 2010 Amendments to Article 9 (Secured Transactions) of
the Uniform Commercial Code is rapidly approaching, and all but a few states
have either adopted the amendments or have introduced legislation to that effect.
Conference Commissioners on Uniform State Laws, Legislative Fact Sheet-UCC
Article 9 Amendments (2010). Most of the 2001 version of Article 9 remains
intact under the 2010 Amendments, but the amendments modify or clarify certain
key provisions of the statute. One of the provisions so modified involves
changes of the debtor's location.
Under Article 9's choice-of-law rules, the debtor's location controls the place
of filing. U.C.C. § 9-301 (1) (Official Text 2009). In other words, secured
parties seeking to perfect their security interests by filing a financing
statement in the public record should file in the state where the debtor is
located. Perfection is essential for secured parties to have priority over
other claimants and to have their security interests survive in the event of
the debtor's bankruptcy filing. See U.C.C. §§ 9-317 (giving perfected
security interests priority over lien creditors and certain buyers); 9-322 (a)
(according perfected senior secured parties priority over later secured parties).
See also 11 U.S.C. § 544 (a) (2011) (allowing the trustee in bankruptcy
to set aside unperfected security interests) [an annotated version of this statute is available to lexis.com
subscribers] . Article 9 dictates that
a registered organization debtor (such as a corporation or limited liability
company) is located in its state of formation and initial registration. U.C.C.
§ 9-307 (e). Individual (natural person) debtors are located in the state of
their principal residence, and nonregistered organizations (such as general
partnerships) are located in the state where they have their place of business
or the state of their chief executive office if they have more than one place
of business. U.C.C. § 9-307 (a), (b).
The 2010 Amendments do not change these basic provisions regarding the debtor's
location or the proper state of initial filing of a financing statement. But
they do clarify issues surrounding the continued effectiveness of a financing
statement filed in State A after a debtor has moved to State B. The 2001
version of Article 9 provides that if a debtor changes its location from State
A to State B, the secured party has a four-month grace period to refile its
financing statement in State B to maintain continuous perfection of its
security interest. U.C.C. § 9-316 (a)(2). If the secured party does not refile
within the four-month period, its security interest becomes unperfected as
against the whole world and is deemed never to have been unperfected as against
purchasers for value. U.C.C. § 9-316 (b).
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