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...
The 2010 Amendments to UCC Art.
9, effective July 1, 2013, do not make sweeping changes to the overall
structure and rules of existing Article 9, but in a few key areas, the drafters
have significantly altered the current statutory provisions to simplify and
clarify the law. One of those areas involves...
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...
by Raphaela Taylor
Secured lenders often resort to non-judicial foreclosure
sales of personal property upon a borrower's default. Article 9, Part 6 of the
Uniform Commercial Code requires that every aspect of such a sale must be
commercially reasonable. However, the courts have historically...
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...
Plaintiff obtained a default judgment against Artemis Technologies and then sought to enforce that judgment serving writs of garnishment on their customers, who were the account debtors on the defendant's accounts receivable. For some reason the Bank with a prior perfected security interest had a...
The first job for any secured party seeking to have an enforceable and perfectible security interest is to achieve attachment by: 1) having the secured party give value to the debtor; 2) the debtor having rights in the collateral and; usually, 3) the debtor's authentication of a security agreement...
The 2010 Amendments to U.C.C. Article 9 went into effect in most states on July 1, 2013. A key portion of the amended debtor name provisions focused on the appropriate name of an individual debtor so as to ensure the best prospects of giving notice of the security interest. The drafters offered two alternate...
It is incumbent upon secured parties to file continuation statements within the six-month period before the expiration of their financing statements to ensure continued perfection. In a recent bankruptcy case, a secured creditor narrowly averted disaster when it let its financing statement lapse after...
Secured parties under U.C.C. Article 9 have a love-hate relationship with the cash proceeds of their collateral. On the one hand, a security interest in original collateral (inventory or accounts, for example) will remain attached and perfected in all identifiable cash proceeds of that collateral...
Tough Company, Inc. v. Wurlitzer 2014 Cal. App. Unpub. LEXIS 633 (Cal. App. 3d Jan. 28, 2014) (Not Officially Published) [ an enhanced version of this opinion is available to lexis.com subscribers ]
In a legal battle between a “Tough Company” and a “Wurlitzer,” you might expect...
The Code has two requirements for foreclosure sales: (1) The secured party must give reasonable notification of the impending sale and (2) the secured party must engage in a commercially reasonable disposition of the collateral. In a recent decision by the 5th Cir. Ct. of Appeals, the court focused on...
Every secured party's nightmare is the realization that it forgot to file a financing statement in the appropriate public office to perfect its security interest. Sometimes that nightmare extends to the secured party's attorney, who may find herself facing a legal malpractice claim for failing...
Consignments are typical in the art world. The owner of a painting who wishes to sell it will often consign it to an art gallery for exhibit to the public. The gallery will be empowered to sell the painting on behalf of the owner, usually at a predetermined minimum price. Upon sale of the...
Much time, energy, and thought has been spent in refining UCC provisions regarding the correct debtor name for a financing statement and the amount of latitude that should be allowed for minor errors. Article 9 was revised in 2010 in part to address these troublesome issues. With the first cases under...
Article 9 of the Uniform Commercial Code permits many different types of property to serve as collateral—both tangible and intangible. Sometimes law firms find themselves in need of funds to support their efforts on behalf of clients and may seek an operating loan secured by prospective fees. This...