Under the U.C.C., to be effective, a filed financing statement must contain the debtors name, the secured partys name (or the name of its representative), and an indication of the collateral. In a recent decision, the Eighth Circuit Court of Appeals held that the secured party’s indication of collateral...
Despite a pro-secured creditor treatment of cash proceeds, the Uniform Commercial Code puts at least one significant limitation on the secured party's ability to recover cash proceeds upon the debtor's default. If the debtor transfers cash proceeds to certain good faith transferees, those transferees...
In this Emerging Issues commentary, Professor Margit Livingston of DePaul University College of Law discusses the special problems under UCC Article 9 that's posed by security interests in deposit accounts. She references a 2009 Nebraska Supreme Court decision that reveals that depository banks that...
cases, filing a financing statement will protect the lessor/secured party from
other secured parties. However, one type of transaction has bedeviled the
courts for many years--the secured transaction disguised as a lease. Professor
examines whether a corporation's possessory repairman's...
with debtor name changes can be a tricky problem for secured parties. Only
three pieces of information are required on a financing statement--the debtor's
name, the name of the secured party or its representative, and an indication of
the collateral. Sometimes debtors run amok, drastically...
in ordinary course of business ("BIOCOB"), usually takes free of even
perfected security interests. In a recent federal district court case, the
court tackled the issue of what it takes to be a BIOCOB in a situation where
the buyer had not yet taken physical possession of the collateral...
Margit Livingston analyzes a recent bankruptcy case in which the court apparently
misunderstood the distinction between chattel perfection and fixture filings.
perfect security interests under Article 9 of the Uniform Commercial Code,
secured parties normally...
Under UCC Article 9, the
priority scheme rewards the creditor who is first to give notice of its
security interest. One of the few exceptions to the rule, however, is the
superpriority afforded certain purchase money secured parties. This Emerging
Issues Analysis addresses a case where the collateral...
The Uniform Commercial Code
itself, scholarly articles, and judicial decisions have long emphasized the
importance of the debtor's name on an Article 9 financing statement. The
debtor's name is one of only three pieces of information absolutely required on
a filed financing statement...
Generally, the law of the
debtor's location governs perfection issues under Article 9 of the Uniform
Commercial Code. In other words, the debtor's location controls the place of
filing of financing statements giving notice of Article 9 security interests.
U.C.C. § 9-301 (1) (Official...
Failure to correctly identify a
debtor on a financing statement can be fatal to a creditor's attempted filing
of a security interest. Newly adopted amendments to Uniform Commercial Code
Article 9 are designed to clear up some areas of confusion regarding how
debtors' names appear on financing...
Security interests in
commercial tort claims require special attention to ensure that they are
properly created and perfected under UCC Article 9. This is demonstrated by two
recent Court of Appeals decisions. Ultimately, both Courts of Appeal held that
the secured party's security interest did...
Credit sellers of large-ticket
items reserve security interests in the items sold to secure the buyer's
payment of the purchase price. These creditors sometimes get off track by
assuming that Article 9 does not apply to the transaction. In a recent Virginia
Supreme Court decision, an automobile dealer...
There are any number of
potential pitfalls along the way to properly setting up a secured transaction,
but perhaps the most bedeviling stems from the failure to set forth the
debtor's name correctly on the financing statement. As a recent bankruptcy court
decision reveals, even sophisticated creditors...
The Permanent Editorial Board
for the U.C.C. recently issued a report explaining the Code provisions relevant
to the transfer and enforcement of mortgage notes. This report highlights the
particular provisions of Articles 3 and 9 that pertain to who can enforce
promissory notes in real property transactions...
Although Article 9 of the
Uniform Commercial Code has attempted to make perfection an easily attainable
goal for secured parties, mistakes still occur, and many of them prove fatal to
the secured creditor's perfected status. The secured party in a recent
bankruptcy case found itself in danger of...
Public filing of a financing
statement is the common method of achieving perfection of a security interest.
Article 9 is unforgiving towards debtor name errors because the debtor's name
is the gateway to the filing system. A recent federal district court case
reveals that more than a decade after...
Where the debtor is radio or
television station, often the most valuable collateral will be the station's
FCC broadcast license. But FCC licenses pose special problems for secured
parties because of the federal restrictions on assignments and transfers of
them. In a recent case, the Tenth Circuit...
The normally impregnable status
of the senior perfected security party is justified by the need to facilitate
the extension of secured credit at reasonable interest rates. But in the case
of buyers in the ordinary course of business, the policies work differently.
If a secured party properly
perfects its security interest by filing a financing statement in the
appropriate public office, it can normally be assured that it will prevail over
a lien creditor (including the trustee in bankruptcy) in a fight over the
debtor's accounts. In a recent bankruptcy...
The debtor name issue has been
a troublesome one for decades. Legislative and judicial attempts to grapple
with it have not been entirely successful. Once again, the drafters are hoping
that this latest round of amendments will finally resolve this key question and
make the public record system even...
by Jamie Watkins Bruno
Under Article 9 of the Uniform Commercial Code ("UCC"), a
secured party perfects its security interest in investment property - such as
certificated and uncertificated securities, securities accounts and commodity
accounts - by acquiring "control" over...
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...
A secured party that perfects
its security interest without flaw at the outset can lose its perfected status
because of post-filing changes in the debtor's business structure. It is
incumbent upon secured parties to keep track of such changes and to act swiftly
to preserve perfection at all times...
In a recent bankruptcy case,
the secured creditors, to their horror, found that they erroneously allowed the
debtor to file a termination statement although the debtor still owed millions
of dollars on the associated transaction. A sympathetic court, however,
applying traditional common law principles...