Secured Transactions Outline

Secured TransactionsNote to self: This outline contains some numbers, some not-numbers.. That's because I outlinedcourse following the book. But then, I took some liberty where the book's topic sequencing/groupingseemed strange.

Chapter 1 - Creating a Security Interest

Introduction

What is a Secured Transaction? (9-109)Party has lent money to debtor, taken back interest in debtors assets (personal property) asa secured interestParty (now a Secured Party) holds onto this secured interest in the property until thesecured party is paid in full.If the debtor defaults in some manner, the secured party can repossess (take the debtorsentire bundle of rights in that property), sell property, and use proceeds against the debt

Why Secured Credit?

Advantages

For Secured PartySecured party [creditor] charges lower interest to debtor (risk of not getting paid ismuch lower since they have that secured interest)Secured party [creditor] has priority if debtor defaults, can foreclose upon debtor (asopposed to unsecured parties, who must go to court to obtain judgment)Secured party [creditor] has leverage over debtor (I have a secured interest over all ofyour assets)Having a secured party [creditor] signals to the rest of the world [other creditors] thatyou are a confident debtor

Disadvantages to SP

What is an Unsecured Transaction?e.g. credit card transactions

Advantages

For Unsecured CreditorCreditor can charge higher interest rateLower transaction costs (unsecured credit/transactions are common, day-to-dayactivities

For DebtorProperty stays unencumbered by debt obligations

Disadvantages

For Unsecured CreditorNo collateralNo priority in case of default or bankruptcy

Key Terms in Creating a Security InterestSecurity Agreement: [9-102(a)(73)] = The agreement that creates the security interest. Themedium may be either tangible or electronic.Security Interest [1-201(b)(35)] = The interest in property that secures payment of the debt.

Secured Transactions file:///C:/Users/lherard/Dropbox/Spring 2013/Secured Transactions/Outli...

1 of 65 5/7/2013 3:42 PM

Financing Statement [9-102(a)(39)] = The record (tangible or electronic) that the securedparty files in public records, usually the states filing office

Collateral [9-102(a)(12)] = General term for ANY property subject to a security interest;collateral may be tangible property or intangible (increasingly popular) property

Examples of Tangible PropertyInventory (Goods held for sale)Consumer Goosd (Goods used for family/household purposes)Farm ProductsEquipment

Note: These categories are from the perspective of the DEBTORCategories are MUTUALLY EXCLUSIVE. Debtor can only classify goods one way, e.g.inventory OR consumer goods.. depends on Debtor's perspective

ExampleIf the debtor is a Retailer, its collateral (e.g. furniture) may be the Inventory it sells(which customers take home, as consumer goods)If the debtor is an individual its goods (e.g. furniture bought from the Retailer) is aconsumer good

Examples of Intangible PropertyAccountsIntellectual Property (e.g. copyrights, trademarks, etc)

General Intangibles (other rights to payment, but NOT accounts, chattel paper, depositaccounts, commercial tort claims, etc.) (see 9-102(a)(42) (see Visualizing SecuredTransactions, p. 12)

1. Rights of Unsecured Creditor

Seller vs Debtor(Historic) Rule: Before judgment (or its equivalent), an unsecured creditor has no rights atlaw or in equity in the property of his debtor.

i.e. to collect from Debtors, seller must:Sue Debtor and obtain money judgmentDo whatever required under State law to authorize sheriff to seize (levy on) D's assetsSell assets in payment of the judgment debt (subject to certain exemptions that allow Dsto protect assets from creditors)

NotesSeizure can be physical taking of property, or symbolic (e.g. by filing papers)Once the seizure occurs, the seller/creditor has an interest in the seized propertyThe interest is called a "judicial lien"Seller is known as a lien creditor (i.e. one who holds a judicial lien)

Seller vs Other Unsecured Creditors and Trustee in BankruptcyFirst in time, first in right

ExampleS1, S2, and S3 all sell to D on unsecured creditD defaults on the debts on all 3 salesS2 follows the procedures required to collect from Debtors (see Seller vs Debtor) Sheriff, acting under the judgment for S2, seized all of D's assets (including those sold by


2 of 65 5/7/2013 3:42 PM

S1 and S3)D now has no more unencumbered assetsPriority among JUDGMENT creditors is based on the time the sheriff seizes the assetsTherefore, S1 and S3 are subordinate to S2's interest

Note: These rights suck. That's why it's better to be a secured creditor

2. Rights of Secured Creditor

Seller vs Debtor

Seller has power to re-take collateral from Debtor

Seller sells wine barrels to D. D promises to pay via Promissory notei.e. Seller has given value; Debtor owes a debt

Seller enters into written security agreement w/ DebtorSec agmt grants security interest in collateral

Sec agmt can be electronic (e.g. e-mail); Debtor authenticates the sec agmt (by signingpaper, or replying to e-mail)

ie Debtor has authenticated sec agmt in an authenticated record. At this point, secinterest has "attached" -- it's enforceable wrt collateral (9-203(a))But note: The sec int is not PERFECTED yet

If D defaults, Seller can retake collateral and sell it at auctionUsu doesn't require going to court unless the proceeds of sale don't cover thedeficiency and Seller wants to recover the differenceIf so, Seller must sue D and obtain a judgment for the deficiency

Seller vs Other Creditors and Trustee in BankruptcySecured Party is prior to other Unsecured Parties under 9-201(a)UNPERFECTED Secured Party is subordinate to Lien Creditors

9-317(a)(2)(A) - Until Seller PERFECTS sec int, the unsecured sec int is subordinate tolien creditorsNote: This is an example of Art 9 providing "otherwise"

Attachment

Who are the Parties to a Secured Transaction?

Debtor (9-102(a)(28))1. Person having an interest (e.g. ownership, but NOT a security interest) in collateral;OR2. Seller of Accounts, Chattel Paper, Payment Intangibles, or Promissory Notes; OR3. Consignee (we didn't cover consignment) Obligor (9-102(a)(59))Person who

1. Owes payment/performance of secured obligation; OR2. Has provided property other than collateral to secure SP's secured obligation; OR3. Is "otherwise accountable" for payment/performance of secured obligation

Secured Party (9-102(a)(72))1. Recipient of Security Interest; OR2. Person holding agricultural lien; OR


3 of 65 5/7/2013 3:42 PM

3. Consignor; OR4. Purchaser of accounts, chattel paper, payment intangibles, or promissory notes; OR5. Representative receiving sec int/ag lien; OR6. Person holding security interest under Art 2, 2A, 4, or 5

NOTE!! The Debtor and the Obligor CAN BE SEPARATE PEOPLE/ENTITIES; thoughthey're usually the sameSecured Party

9-203(b) Security interest attaches when:(1) Secured party gives value; AND

"Value" means:A binding commitment to extend credit, or the extension of immediately availablecredit; ORA pre-existing claim; ORDelivery under a pre-existing contract; ORAny consideration sufficient to support a simple contract

(2) Debtor has rights in collateral (RIC) or the power to transfer RIC to a secured party; AND(3) Another thing (see 9-203(b))

9-203(b)(3)(A) Authenticated Security Agreement (9-203(b)(3)(A)) that describes thecollateral (and, if timber is involved, describes the land), OR

Definition: Agreement that creates or provides for a security interest (9-102(a)(73));Signed by debtor

(B) SP has possession of the collateral (under 9-313), and the collateral is not acertificated security in registered form (e.g. car deed?); OR(C) The security IS a certificated security in registered form and the security certificatehas been delivered to the SP (under 8-301); OR(D) the collateral is deposit accounts, electronic chattel paper, investment property, orletter-of-credit rights, and the secured party has control under Section 9-104, 9-105,9-106, or 9-107 pursuant to the debtor's security agreement

1, The Security Agreement

What is the Security Agreement?An agreement that creates or provides for a security interest (9-102(a)(73))

Key Guidelines for Sec Agmt FormationShould always include the magic language (debtor grants a SI in X which secures $$$)Must be either written or done via an electronic mediumAuthentication [9-102(a)(7)] = Includes either signing a record or adopting a symbol orencrypt with the present intent of the authenticating person to identify that person and toadopt/accept the record

2. The Composite Document RuleA signed fin stmt may operate as a sec agmt (see Bollinger), if combined w/ otherdocuments to show intent to create sec agmt

In re Bollinger Corp (Majority View) (CA3 1980)FP

ICC loaned Bollinger $150K. ICC filed financing statement. Z&J made loan toBollinger, agreeing to pay off ICC loan in exchange for the assignment of ICCs


4 of 65 5/7/2013 3:42 PM

original promissory note and SA to Z&J. Bollinger then executed a promissory noteto Z&J, evidencing the agreement (and referring to the SI). No formal SA was everexecuted between the parties, but Z&J did file a financing statement in connectionwith the promissory note. When Bollinger declared bankruptcy, administratorrefused to recognize Z&Js SI in the machinery and equipment that had originallysecured ICCs loan

ICan a signed financing stmt operate as a security agreement?

RAHHELD: the minimal formal requirements of 9-203(1)(b) were met by the Fin stmt andthe p note; and the crs of dealing btwn parties indicated the intent to create asecurity interestRULE: Multiple documents taken together may create a security if intent to createa sec int is shown

Although there is no formal SA, the collection of documents here (FS +promissory note + course of dealing documents) provide enough evidence ofparties' intent

American Card (Minority View)HELD: A writing CANNOT operate as a SA unless it contains some wordsUNEQUIVOCALLY and SPECIFICALLY granting a security interest

Two views re: existed of valid security agreement:

Pro-Secured Creditor View:The requirement of a written sec agmt is merely for evidencei.e., If (1) Creditor advances money to Debtor, (2) Debtor signs promissory note, and(3) the fin stmt describes the collateral, then a sec interest has been created. (i.e.No need for a formal sec agmt)A-1 Paving

FPPort Royal entered into a Sales Contract with A-1, selling equipment and motorvehicles to A-1 in exchange for repayment in monthly installments. The SalesContract specified that any disputes should be governed pursuant to IN law.Port Royal then filed a UCC-1 FS and attached Exhibit B which provided adescription of the equipment/vehicles transferred under the Sales Contract.

IWhether Port Royal and A-1 created a valid SI in the assets that Port Royalcontracted to sell to A-1?

RAHHELD: COURT: YES

RULE: A properly-filed UCC Fin Stmt creates an effective SI under Article 9 (ofIndianas UCC) if

(1) that financing statement satisfies the formal writing requirements under9-203 AND(2) the finder of fact determines that the parties intended the FS to serve asa security interest(parol evidence ADMISSIBLE as to this prong)

Note: This holding is very far-reaching

Pro-Trustee in Bankruptcy View:


5 of 65 5/7/2013 3:42 PM

The secured creditor has a very strong position against other creditors in bankruptcy

Note: A security agreement may serve as a financing stmt if signed by both parties(9-402)

3. Description of Collateral

Description of Collateral in the Security Agreement9-108(a) - Description of personal property is sufficient, whether or not it is specific IFIT REASONABLY IDENTIFIES WHAT IS DESCRIBED

Examples of what "Reasonably Identifies" collateral

For Investment Properties e.g. Security Entitlement, Securities Account, orCommodity Account (9-108(d))

Use of those terms, ORUse of the term, "Investment Property", ORDescription of underlying financial asset or commodity contract

For Other Collateral (9-108(b))Specific ListingCategoryType of collateral defined in the UCCQuantityComputational/allocational formula or procedure; ORID "by any other method" IF the identity of the collateral is objectivelydeterminable

What is NOT sufficient to reasonably ID collateral

"Super-generic" descriptions, such as "all the debtor's assets" or "all the debtor'spersonal property" - 9-108(c)

i.e. Sec Agmt MUST be specific in naming collateral

POLICYDebtor's property is at risk

A description only by "type of collateral" for (9-108(e))Commercial Tort Claim (defined in 9-102(a)(13)); ORIn a consumer transaction, description "by type" for Consumer Goods, A securityentitlement, a securities account, or a commodities account

Financing Statement: A financing stmt sufficiently indicates the collateral it covers if itprovides

(1) a description of the collateral pursuant to 9-108 (the Security Agreement rules); OR(2) an indication that the financing stmt covers all assets or all personal propertyNOTE: The fin stmt CAN have super-generic description of collateral

POLICYThis broader standard is consistent with the purpose of a FS needs to merelynotify subsequent creditors that a lien may exist and that further inquiry is necessary

Security Agreement vs Financing StatementSecurity Agreement MAY NOT use "super-generic" descriptions, e.g. "all assets"Financing Stmt MAY use "super-generic" descriptions

In re Grabowski (SD Ill 2002)


6 of 65 5/7/2013 3:42 PM

FPPriority dispute between Bank of America and South Pointe Bank regarding theirSIs in three items of farm equipment owned by the debtors. B of A claims a prior SIin the equipment by virtue of a SA signed by the debtors in Dec. 1998; B of A thenfiled a FS listing the debtors business address and describing the collateral as AllInventory, Chattel Paper, Accounts, Equipment, and General Intangibles. SouthPointe then obtained a lien on the debtors equipment in January 2000; SouthPointe filed a FS describing the collateral specifically.

ISouth Pointe alleges that B of As FS, although prior in time, was INSUFFICIENT toperfect the Banks SI because it did not mention any specific items of equipment oreven make reference to farm equipment or farm machinery

RAHHELD: COURT: B of As FS SUFFICIENT to perfect its SI in the subject farmequipment (and, therefore, the Banks interest, being prior in time, SUPERIOR tothat of South Pointe)B of As FS, although providing a general description, was SUFFICIENT to notifysubsequent creditors that a lien existed on the debtors property

6. Value and Rights in Collateral

9-203(b): Sec int does not attach in collateral until value has been given and debtor hasrights in collateral

a. Value

"Value" means:A binding commitment to extend credit, or the extension of immediately availablecredit; ORA pre-existing claim; ORDelivery under a pre-existing contract; ORAny consideration sufficient to support a simple contract

1-204(4): Any consideration sufficient to support a simple contract9-102(a)(57): "New value" --> money, property, or new credit given up front

b. Rights in Collateral

"Rights in collateral"Need not be FULL property rights

9-203, Cmt 6: A debtor's limited rts in collateral, short of full ownership, aresufficient for a sec int to attach

e.g. A lessee of personal property doesn't OWN the leased the property, but maycreate a sec int in its valuable rights under the lease

"Power to transfer rights in collateral"9-203, Cmt 6: This lang allows a debtor to transfer, and a sec int to attach to,greater rights than the debtor has

Swets Motor Sales, Inc. v. Pruisner

FPSwets Motor Sales, Inc. v. Pruisner (IA 1975) Swets sold used cars/trucks toPruisner, a retail auto dealer. Pursuant to an oral agreement, Swets deliveredvehicles to Pruisner with unencumbered certificates of title and was paid by


7 of 65 5/7/2013 3:42 PM

Pruisner at the time of delivery. Chrylser financed Pruisners inventory basedupon a valid security agreement with filed financing statements covering allvehicles in Pruisners possession. In 1973, four of Pruisners checks, written toSwets and worth approximately $31,000, were dishonored.

IPruisner then sued on the grounds that his interest in the automobiles wassuperior (it still held title) to that of Chrysler.

RAHHELD: The rights of Swets to the automobiles in question is junior and inferior toChryslerRULE: UCC 2-403 governs A purchaser of goods acquires all title which histransferor had or had power to transfer except that a purchaser of a limitedinterest acquires rights only to the extent of the interest purchased. A person withvoidable title has power to transfer a GOOD title to a good faith purchaser forvalue. When goods have been delivered under a transaction of purchase thepurchaser has such power even though(b) the delivery was in exchange for acheck which is later dishonored-Thus, despite the fact that Pruisner tendered a subsequently dishonored check,he could transfer good title to a good faith purchaser for value. -No questions asto Chryslers lack of good faith-Chysler gave value (because they acquired the rights to the cars as security foror in total/partial satisfaction of a pre-existing claim)

Notes-Chysler is also a VALID SECURED PARTY When Swets delivered thevehicles, Pruisner acquired SUFFICIENT RIGHTS in the vehicles to permitChyslers SI to ATTACH

Automatic Attachment of Sec Int to Certain kinds of Collateral

A sec int automatically attaches to certain types of collateral

4. Automatic Attachment of Sec Int to After-Acquired CollateralUnder Article 9, a SI may not only apply to the collateral that the debtor owns at thetime the SI is granted but also to later-acquired collateral.As specified by 9-204, NO NEW security agreement is necessary when the collateralis acquired LATER if the security agreement provides that it applies to after-acquiredcollateral.

No new Sec Agmt needed for non-Consumer Goods Collateral under 9-204(a)Sec int may apply not only to collateral the debtor owns at time sec int is granted,but also to after-acquired collateralRULE: 9-204(a) - IF sec agmt provides that it applies to after-acquired collateral,THEN no new sec agmt is necessary

What happens when parties have left out after-acquired property clauses ininventory or accounts financing transactions in which it is likely that they intended toinclude the terms?

UCC does not say; Issue is left to state law

Majority ApproachSecurity interests in inventory and accounts receivable PRESUMABLYINCLUDE after-acquired inventory and receivables, SUBJECT to rebuttal byevidence that the parties intended otherwise


8 of 65 5/7/2013 3:42 PM

POLICYRests on the unique nature of inventory/accounts receivable as cyclicallydepleted and replenished assets.

In re Filtercorp, Inc (Majority Approach) (CA9 1998)FP

In re Filtercorp (9th Cir. 1998) Filtercorp took out a series of loans fromPaulman. The loans were memoralized by promissory note, whichprovided for a security in the accounts receivable and inventory ofFilterCorp. The parties never executed a separate SA, but Paulmanperfected his interest by filing a FS. Despite the notes reference to aninventory listing, none was attached to the note or the FS.

IDid the parties intend to secure AFTER-ACQUIRED inventory/accountsreceivable with the 1992 promissory note?

RAHHELD: Ct adopts majority view (rebuttable presumption)Presumption that after-acquired property is included STANDS unrebuttedas to accounts receivable; no evidence of intent -> Paulman has a SI inafter-acquired accounts receivable of Filtercorp.Presumption that after-acquired property is REBUTTED for inventory bythe reference to the attached inventory listing (even though it was neveractually attached)

Minority ApproachRequire EXPRESS language evidencing the parties intent to cover after-acquired inventory or accounts receivable

POLICYIt's neither onerous or unreasonable to require a SA to make clear itsintended collateral

New Sec Agmt needed for Consumer Goods Collateral under 9-204(b)Sec int in after-acquired property does not extend to consumer goods collateral

RULE: 9-204(b)(1) - An after-acquired property clause is not effective wrt consumergoods

BUT! The after-acquired property clause IS effective wrt consumer goods if thedebtor acquires rights in them within 10 days after the secured party gives valuee.g. when a consumer buys a stove from a retailer on secured credit, the retailer'ssec int does not also extend to other consumer goods purchased later

RULE: 9-204(b)(2) - An after-acquired property clause is not effective wrtcommercial tort claims

5. Automatic Attachment of Sec Int to Proceeds of CollateralRevised art 9 assumes (as did former Art 9) that the parties intend that the sec agmtcovers proceeds unless otherwise agreed

9-203(f) + 9-315(a)(2) ==> sec int attached to collateral automatically attaches to anyidentifiable proceeds of the collateral

"Proceeds" means:1972 version: whatever is received when collateral is sold, exchanged, collected,or otherwise disposed of


9 of 65 5/7/2013 3:42 PM

1994 version: "proceeds" includes payments or distributions made wrt investmentproperty collateral (see former 9-306(2))Rev 9-102(a)(64): 'Proceeds" includes what is "acquired upon the sale, lease,license, exchange, or other disposition of collateral"

Includes claims arising from loss or damage to the collateral (9-102(a)(64)(D))Insurance payments arising from such loss or damage are also "proceeds"(9-102(a)(64)(E))

Rev: 9-102(a)(12)(A): "Collateral" includes proceedsNote: Revised Article 9 takes a different approach by defining collateral toinclude proceeds -> Under this system, FINAL-GENERATION PROCEEDS areconsidered proceeds, while EARLIER-GENERATION PROCEEDS areconsidered collateral

Attachment of Sec Int to Supporting Obligations

9-203(f): A sec int that attaches to collateral automatically attaches to obligationssupporting the collateral

i.e. Art 9 treats supporting obligations the same way it treats proceeds"Supporting obligation" = 9-102(a)(77) --> means a letter-of-credit right or secondaryobligation that supports the payment or performance of an account, chattel paper, adocument, a general intangible, an instrument, or investment property

Chapter 2 - Perfection

A. Introduction

9-308: Perfection of Security InterestExcept as otherwise provided in this section and Section 9-309, a security interest isperfected if it has attached and all of the applicable requirements for perfection in Sections9-310 through 9-316 have been satisfied.A security interest is perfected when it attaches if the applicable requirements are satisfiedBEFORE the security interest attaches.

Difference between "perfection" and "attachment"If a sec int has "attached," it is enforceable against the debtor (9-203(b)) and unsecuredcreditors (9-201(a))BUT to have the most favorable status wrt 3rd party claimants (eg other secured parties,buyers, and lien creditors), the sec int must be perfected

Outside of Bankruptcy:A sec int that is "attached," but not "perfected" is enforceable against unsecured creditorsand the debtor

In BankruptcyBC 544(a)(1): The Trustee in Bankruptcy has the rights of a lien creditor9-317(a)(2): An unperfected sec int is generally subordinate to the rights of a lien creditorIf the sec int is avoided in bankruptcy, the former sec party is demoted to the status of anunsecured creditor

Overview - Methods of Perfection

Perfection By Attachment (9-309)Some Sec Ints Perfect Automatically When They Attach (see below.. this is just a summaryoverview)

(1) Purchase-Money Security Interests (PMSIs) in consumer goods (except as otherwise


10 of 65 5/7/2013 3:42 PM

provided in 9-311)(2) an assignment of accounts or payment intangibles which does not by itself or inconjunction with other assignments to the same assignee transfer a significant part of theassignor's outstanding accounts or payment intangibles;

(3) a sale of a payment intangible9-102(a)(61): "Payment intangible" means a general intangible under which theaccount debtor's principal obligation is a monetary obligation.

(4) a sale of a promissory note(5) a security interest created by the assignment of a health-care-insurance receivable tothe provider of the health-care goods or services;(6) a security interest arising under Section 2-401, 2-505, 2-711(3), or 2A-508(5), until thedebtor obtains possession of the collateral;(7) a security interest of a collecting bank arising under Section 4-210;(8) a security interest of an issuer or nominated person arising under Section 5-118;(9) a security interest arising in the delivery of a financial asset under Section 9-206(c);(10) a security interest in investment property created by a broker or securitiesintermediary;(11) a security interest in a commodity contract or a commodity account created by acommodity intermediary;(12) an assignment for the benefit of all creditors of the transferor and subsequenttransfers by the assignee thereunder; and(13) a security interest created by an assignment of a beneficial interest in a decedent'sestate.

By Possession or Delivery of Collateral (9-313)9-313(a): Possession of collateral by the Secured Party constitutes perfection with respectto:

GoodsInstruments (e.g. promissory notes, checks)Negotiable documents (e.g. bills of lading, warehouse receipts)Chattel paper (leases of personal property, sales contracts reserving a sec int)Money (currency), ANDCertificated securities (stocks, bonds)

i.e. the above types of collateral can be physically possessedInstruments, chattel paper, and certificated securities are all represented by essentialwritings, which are tangible

General Intangibles and accounts are NOT represented by essential writings

By Control (ability to dispose of collateral unilaterally, w/o further authorization from Debtor)"Control" = ability to dispose of collateral unilaterally (i.e. w/o cooperation of the debtor)Types of collateral that REQUIRE control:

9-312(b)(1): Control = only method of perfecting a sec int in a deposit acct (e.g.checking/savings accounts at a bank)

Compliance with Other Law9-311 -- Sec ints subject to other law can be perfected ONLY in compliance w/ that law (i.e.not in compliance w/ Art 9)e.g. Motor vehicles -- sec ints in vehicles comply w/ state vehicle codee.g. sec ints in Registered Copyrights must be recorded in the Copyright Office in Wash DC


11 of 65 5/7/2013 3:42 PM

Filing9-310(a) -- BASIC RULE: Perfection must be by filing a financing statement (except forwhen filing isn't necessary)9-502(d) -- Financing Stmt may be filed BEFORE sec agmt or sec int attaches

A financing statement may be filed before a security agreement is made or a securityinterest otherwise attaches.

9-310(b) -- Lists cases when filing is NOT necessary to perfect sec int:(1) sec int is perfected under 9-308(d), (e), (f), or (g)

9-308(d) [Supporting Obligation]: Perfection of a security interest in collateral alsoperfects a security interest in a supporting obligation for the collateral.

9-308(e):(2) sec int is perfected under Section 9-309 when it attaches;(3) sec int is in property subject to a statute, regulation, or treaty described in Section9-311(a);(4) sec int is in goods in possession of a bailee which is perfected under Section9-312(d)(1) or (2);(5) sec int is in certificated securities, documents, goods, or instruments which isperfected without filing or possession under Section 9-312(e), (f), or (g);(6) sec int is in collateral in the secured party's possession under Section 9-313;(7) sec int is in a certificated security which is perfected by delivery of the securitycertificate to the secured party under Section 9-313;(8) sec int is in deposit accounts, electronic chattel paper, investment property, or letter-of-credit rights which is perfected by control under Section 9-314;(9) sec int is in proceeds which is perfected under Section 9-315; or(10) sec int is perfected under Section 9-316.

Automatic Perfection By Attachment

Some Sec Ints Perfect Automatically When They Attach(1) Purchase-Money Security Interests (PMSIs) in consumer goods (except as otherwiseprovided in 9-311)(2) an assignment of accounts or payment intangibles which does not by itself or inconjunction with other assignments to the same assignee transfer a significant part of theassignor's outstanding accounts or payment intangibles;

(3) a sale of a payment intangible9-102(a)(61): "Payment intangible" means a general intangible under which the accountdebtor's principal obligation is a monetary obligation.

(4) a sale of a promissory note(5) a security interest created by the assignment of a health-care-insurance receivable to theprovider of the health-care goods or services;(6) a security interest arising under Section 2-401, 2-505, 2-711(3), or 2A-508(5), until thedebtor obtains possession of the collateral;(7) a security interest of a collecting bank arising under Section 4-210;(8) a security interest of an issuer or nominated person arising under Section 5-118;(9) a security interest arising in the delivery of a financial asset under Section 9-206(c);(10) a security interest in investment property created by a broker or securities intermediary;(11) a security interest in a commodity contract or a commodity account created by acommodity intermediary;(12) an assignment for the benefit of all creditors of the transferor and subsequent transfers


12 of 65 5/7/2013 3:42 PM

by the assignee thereunder; and(13) a security interest created by an assignment of a beneficial interest in a decedent'sestate.

B. Perfection By Filing

Policy behind FilingArticle 9 filing system has two purposes: (1) to allow the filing party to establish a priority inthe debtors collateral and (2) to provide information to the searching party about SI in thisproperty

1. The Notice Filing System"Notice Filing" = the only record filed is a financing stmt that gives NOTICE that a sec intmay exist in the debtor's collateral

POLICYAllow filing party to establish priority in debtor's collateralProvide info to the searching party about sec ints in the propertyThis type of system generally shifts burden onto searching/inquiring creditor -> once thiscreditor finds a financing statement, creditor should either go to the debtor to inquire as tothe specifics of the SA OR the creditor may also go to the secured party (but the SP hasNO DUTY to respond to other creditors) Duty of Secured Party to Resond to Requests for InformationDuty: UCC 9-210 Request for Accounting -> SP has a statutory duty to provide a list ofcollateral and respond to requests for an account if the DEBTOR requests accountingFailure to comply with 9-210 may lead to actual/statutory damages (9-625)9-210(b) -- Secured Parties must respond to requests for accounting (of debtor?)9-210(c): SP MAY respond to requests for a list of collateralSee also 9-210(d) and 9-210(e).

Rules Governing Filing

What is a Financing Statement?"Financing statement" means a record or records composed of an initial financingstatement and any filed record relating to the initial financing statement. (9-102(a)(39))

When Is A Financing Statement Required to Perfect a Sec Int?

General RuleFinancing Stmt must be filed to perfect security interest

Exceptions1. Perfection of Sec Int in Collateral Related to Collateral as to which perfection occurs(9-308(d) - (g))2. Automatic Perfection upon Attachment (9-309)3. Property whose perfection is governed by other applicable law (9-311)

e.g. cars

4. Goods in the possession of a bailee covered by a non-negotiable document(9-312(d))5. Temporary Perfection (9-312(e)-(g))

Automatic Perfection for 20 days after attachment ofCertificated securities, negotiable documents, or instruments, to the extent thesec int arises for new value given under authenticated sec agmt (9-312(e))


13 of 65 5/7/2013 3:42 PM

6. Perfection by Possession (SP in possession of collateral) (9-313)7. Perfection of Certificated Security by Delivery (9-313)8. Perfection by Control (9-314)9. Perfection in Proceeds (9-315)10. Perfection upon a Change in Governing Law (9-316)

The Filing System - What Do You File (and what constitutes "filing"?a. Financing Statement Records

Initial Financing Statement

What to FileInitial Fin Stmt Form = 9-521(a) (must be accepted by ALL filing offices)If more space needed (e.g. more than 2 debtors, ore more than 1 SP, or morespace needed to decribe collateral: use Form UCC1Ad as supp to fin stmt

Duration: How Long Fin Stmt LastsInitial Fin Stmt lasts for 5 years (9-515(a))At end of 5 yrs, initial fin stmt lapses, UNLESS a continuation is filed BEFOREexpiration (9-515(c))

Who can File?If D authenticates the sec agmt, then the D has automatically authorized the filingof a fin stmtA person can file an init fin stmt ONLY IF debtor has authorized the filing in anauthenticated record (9-509(a))

What Happens if Filing was not Authorized?The fin stmt is INEFFECTIVE (9-510(a))Filer is liable under 9-625 for actual and statutory damages

Amendment

What is an Amendment?

9-512(a) - Amendment means...Continuation/termination of fin stmtAddition/deletion of collateralChanging info in fin stmt

Continuation Statement

PurposeExtends fin stmt an additional 5 years (if filed BEFORE lapse of fin stmt)(9-515(e))

Effect of Continuation Stmt5 year extension starts at the time the fin stmt would have become ineffectivehad no continuation been filed

When can Continuation Be Filed?Continuation can only be filed w/in 6 months of expiration of fin stmt (9-515(d))POLICY

This prevents filer from accumulating 5-year extensions by filingcontinuations all at once


14 of 65 5/7/2013 3:42 PM

Other Amendments do NOT extend fin stmtsee 9-512(b)

Who can file continuation?9-509(d)(1) - the SP of record (9-511) may authorize the filing of a continuationw/o further authorization by Debtor if some part of the obligation secured by thesec int is still owed

Termination Statement (9-513)Consumer Goods

9-513(a)A secured party shall cause the secured party of record for a financingstatement to file a termination statement for the financing statement if thefinancing statement covers consumer goods and:(1) there is no obligation secured by the collateral covered by the financingstatement and no commitment to make an advance, incur an obligation, orotherwise give value; OR(2) the debtor did not authorize the filing of the initial financing statement.

In Commercial CasesIf obligation secured by the collateral secured by fin stmt is paid in full, debtormay demand termination (9-513(c))If D DEMANDs term, SP has 20 days to:

1. Send D a termination statement that D may file, OR2. File the term stmt. itself

No Duty for SP to TerminateThe SP has NO DUTY to send D a term stmt until D demands one

Protection for Debtor Even if D forgets to demand term stmt, Fin Stmts automatically expire

after 5 years, UNLESS they are continuedWhat if the debt is NOT paid in full before 5 years???

In Non-Commercial Cases??

Debtor's PowersIf SP fails to comply with 9-513(a) or (b), debtor may authorize the filing of aterm stmt. 9-509(d)(2)

Assignment (9-514)9-514(a) Assignment Reflected on Initial Filing Statement

See statute?

9-514(b) Assignment of Filed Financing StmtSee statute?

9-514(c) Assignment of Record of MortgageSee statute?

See also 9-511 -- Secured Party of Record

b. Safe Harbor Form


15 of 65 5/7/2013 3:42 PM

9-521(a) Safe Harbor Initial Financing Statement Form (accepted by all filing offices)What is REQUIRED on init fin stmt (9-516(b)(5)(C))

Type of OrganizationJurisdiction of OrganizationOrganizational ID

What data is OPTIONAL on init fin stmtSocial Security # (see 9-516(b))

Addendum (Form UCC1Ad)When the Addendum is Required:

If collateral is real property-related collateral such as timber to be cut or goodsthat are to become fixtures

What Constitutes Filing

9-516(a): Except as otherwise provided in subsection (b), communication of a recordto a filing office and tender of the filing fee or acceptance of the record by the filingoffice constitutes filing.

NOTE! This means that if the filing office accepts a filing that is missing info (e.g.addresses), it still counts.

9-520(c): The fin stmt is "effective" if it contains the debtor name and collateral2. Sufficiency of Financing Statement

See 9-521(a) -- Sets out the Safe Harbor Financing Stmt form9-502(a): Fin stmt is "sufficient" ONLY IF it:

Provides the name of the debtor AND (see below for more about what constitutes a sufficient statement of the debtor's

name)The name of the secured party (or its representative) (9-503), ANDIndicates the collateral covered by the fin stmt (9-504)

Indication of collateral as described in 9-108 (for security agreements) 9-504; ORStatement that Financing Stmt covers "All assets" or "All personal property"

Note: Super-Generic descriptions of collateral ARE allowed in the FIn Stmt(9-108(b)(3))

NOTE: Even if the fin stmt is suficient, filing may not have taken place, because thefiling office may still refuse the fin stmt. see 9-516

4. Indication of Collateral

a. Original Collateral

9-502(a)(3): Fin stmt MUST indicate the collateral covered by the fin stmtDescription of Collateral (9-504(2)) is met by:

Description of Collateral (under 9-108), ORAn indication that the fin stmt covers "all assets or personal property"(9-108(b)(3))

POLICYGeneric descriptions of collatearl are allowed in fin stmt because fin stmt


16 of 65 5/7/2013 3:42 PM

only serves to notify the world that there may be a sec int in D's property

ProGrowth Bank, Inc. v. Wells Fargo Bank, N.A.FIRAH

b. Proceeds

Basic Rules:1. A perfected security interest in the original collateral AUTOMATICALLYcontinues in the proceeds, WHETHER OR NOT the fin stmt mentions proceeds(9-315(c))2. If a filed fin stmt covers the original collateral, the sec int in the proceedscontinues until the fin stmt either lapses or is terminated (9-315(e)(1)), AS LONGAS:

(a) the proceeds themselves are collateral in which a sec int may be perfectedby filing (in the office in which the fin stmt is filed) AND(b) the proceeds are not acquired with cash proceeds (9-315(d)(1))

3. A sec int in cash proceeds continues INDEFINITELY

4. If the debtor uses cash proceeds to buy NEW collateral (e.g. inventory orequipment), then the sec int continues in the new collateral for only 21 days.(9-315(d)(3)); See also 9-315, Cmt 5

HOWEVER, if the fin stmt indicates the type of collateral purchased,then the sec into continues in the new collateral until fin stmt lapses or expires?

5. Name of Debtor

a. Basic Rules

9-503(a): A fin stmt "sufficiently provides the name of the debtor if":(1) If D is INDIVIDUAL: By giving the name of the individual, NOT THE D/B/A ortrade name (9-503(a)(4)(A))(2) If D is a GENERAL PARTNERSHIP: By giving the name of thePARTNERSHIP, not the names of the parters

BUT!! If the partnership doesn't have a name (e.g. no formal p-ship agmt), thenuse the partner's individual names

(3) If D is REGISTERED ORGANIZATION: By giving the name ofthe organization indicated in the pub records of the D's organizing jurisdiction(9-503(a)(1))

"Registered Organization": 9-102(a)(70) -- Organized under the law of a stateor fed govt that requires the maintenance of a public record showing theorganization to have been organizedExamples: Corporations, LLCs, Limited PartnershipsNOT Included in Registered Organizations: General Partnerships (see 9-503,cmt 2)

b. Minor Errors Rule

9-506 - Resolves disputes regarding minor errors on fin stmt9-506(a) - A Fin stmt w/ minor errors IS EFFECTIVE... UNLESS!! the errorsmake the fin stmts "seriously misleading"


17 of 65 5/7/2013 3:42 PM

What is "seriously misleading?"9-506(b): Except otherwise provided in (c), a fin stmt that "fails sufficiently toprovide the name of the debtor in accordance w/ 9-503(a) is seriouslymisleading9-506(c): If a search of the records of the filing office under the debtor's correctname, using the filing office's standard search logic, if any, would disclose the'correct' financing statement, even though the D's name is technicallyincorrectly stated wrt Section 9-503(a), the filed name is ok (i.e. not seriouslymisleading).

1. Trade Names

Before revised Art 9 -- Cts held that the use of a trade name in the fin stmt wasappropriate

e.g. D's legal name is "Becaon Realty Investment Co", a gen pship. Its tradename is "Hilton Inn". Before Rev Art 9, a fin stmt w/ Hilton Inn wouldsufficiently name the organization

In part because a gen pship does not have a legal reqment to be namedw/ the legal name, since it's not a registered org?

Under Revised Art 9 -- 9-503(c) -- Trade name is INSUFFICIENT to name theDebtor

2. Search Logic Issues

"Reasonably Diligent Searcher Rule: Even if the D's name is not correctly stated,diligent searchers using the D's correct name should find the right (defective) finstmt

Some cts hold that even though 2 the filed name is incorrect, if it's spelledclosely enough, it's oke.g. Correct name = Voyageur Corp; Fin Stmt says Voyager Corp -- ct holdsthat this is ok (i.e. not seriously misleading)e.g. Correct name = Mines Tire Company, Inc; filed name = Mines Company,Inc. -- ct held this was ok (i.e. not seriously misleading)

Before Rev Art 9: Burden was on the SEARCHING CREDITOR to find the rightfin stmt, to determine whether there may be any sec ints in D's collateralRev Art 9: Burden is on the FILING CREDITOR to file the correct name on the finstmt9-506(c): If a search of the records of the filing office under the debtor's correctname, using the filing office's standard search logic, if any, would disclose the'correct' financing statement, even though the D's name is technically incorrectlystated wrt Section 9-503(a), the filed name is ok (i.e. not seriously misleading).

Pankratz Implement Co v. Citizens National BankFPIRAH

Add in OneNote notes about 9-503 (2010 Amendments) -- see 2/12 lecture3. Financing Statement Must Be Authorized by Debtor

Art 9 no longer requires that fin stmt be signed by debtor9-502(a) -- drops the signature requirement. BUT! Debtor must still "authorize" the finstmt in an authenticated record.


18 of 65 5/7/2013 3:42 PM

9-509(a) -- A person (usu the Secured Party [SP]) may file a fin stmt ONLY IF debtorauthorizes the filing in an authenticated record9-509(b) -- By authenticating, the debtor/new debtor authorizes the filing of an initial finstmt, and an amendment covering (1) the collateral described in the SEC AGMT and(2) property that BECOMES collateral later under 9-315(a)(2), whether or not the secagmt expressly covers proceeds9-510(a) -- A Filed record is effective only to the extent it was filed by a person whomay file it under 9-509

POLICYDropping the signature requirement allows for electronic filing

Damages: If SP files fin stmt w/o required auth by Debtor9-625(b): Debtor can collect in the amt of loss caused by SP's act9-625(e)(3): Provides for $500 recoverable by Debtor9-513(c)(4): Allows Debtor to demand a termination stmt from SP (e.g. back out of secint)

Term stmt must be sent w/in 20 days after it receives the demand

But also: 9-518 -- Allows for the filing of a correction stmt to fix an incorrect filing

3. When Filing Becomes Effective

When does filing "occur"? (9-516(a))(a) when a fin stmt is presented to the filing office w/ tender of filing fee, OR(b) when the filing office accepts the record

a. Filing Office Indexing Errors9-517 - Failure of filing office to index a record correctly does not affect theeffectiveness of the filingSee also 9-519(h), 9-523(a).

b. Duty of Filing Office to Accept or RejectWhen the Filing Office MUST refuse to accept a record (9-520(a))

For a reason set forth in 9-516(b)i.e. the filing office CANNOT refuse for a reason other than in 9-516(b)

When the Filing Office MAY refuse to accept a recordONLY for a reason set forth in 9-516(b)i.e. the filing office CANNOT refuse for a reason other than in 9-516(b)

9-516(b)Filing does not occur with respect to a record that a filing office refuses to acceptbecause:(1) the record is not communicated by a method or medium of communicationauthorized by the filing office;(2) an amount equal to or greater than the applicable filing fee is not tendered;(3) the filing office is unable to index the record because: (A) in the case of an initial financing statement, the record does not provide aname for the debtor; (B) in the case of an amendment or correction statement, the record: (i) does not identify the initial financing statement as required by Section9-512 or 9-518, as applicable; or


19 of 65 5/7/2013 3:42 PM

(ii) identifies an initial financing statement whose effectiveness has lapsedunder Section 9-515; (C) in the case of an initial financing statement that provides the name of adebtor identified as an individual or an amendment that provides a name of a debtoridentified as an individual which was not previously provided in the financingstatement to which the record relates, the record does not identify the debtor's lastname; or

(D) in the case of a record filed [or recorded] in the filing office described inSection 9-501(a)(1), the record does not provide a sufficient description of the realproperty to which it relates;(4) in the case of an initial financing statement or an amendment that adds asecured party of record, the record does not provide a name and mailing address forthe secured party of record;(5) in the case of an initial financing statement or an amendment that provides aname of a debtor which was not previously provided in the financing statement towhich the amendment relates, the record does not: (A) provide a mailing address for the debtor; (B) indicate whether the debtor is an individual or an organization; or (C) if the financing statement indicates that the debtor is an organization, provide: (i) a type of organization for the debtor; (ii) a jurisdiction of organization for the debtor; or (iii) an organizational identification number for the debtor or indicate that thedebtor has none;(6) in the case of an assignment reflected in an initial financing statement underSection 9-514(a) or an amendment filed under Section 9-514(b), the record does notprovide a name and mailing address for the assignee; or(7) in the case of a continuation statement, the record is not filed within thesix-month period prescribed by Section 9-515(d).

If the filing office wrongfully accepts a record that does not contain the information setout in 9-516

Liability/DamagesArticle 9 does NOT address the liability of a filing officer to those harmed by negligenceState law governs negligence

Fin stmt can survive errors (9-520(c))9-520(c) - A filed financing statement satisfying Section 9-502(a) [sufficiency of finstmt] and (b) is effective, even if the filing office is required to refuse to accept it forfiling under subsection (a)However, Section 9-338 [priority of sec int/ag lien perfected by filed fin stmt withincorrect info] applies to a filed financing statement providing information described inSection 9-516(b)(5) which is incorrect at the time the financing statement is filed.

What If the Filer Makes Minor Errors/Omissions?

Substantial Compliance DoctrineFinancing Stmt is still effective, despite minor error/omissions, UNLESS seriouslymisleading (9-506(a))What is/isn't Seriously Misleading?


20 of 65 5/7/2013 3:42 PM

Error/Omission Related to Debtor's NameA Fin Stmt where the name does not comply w/ 9-503(a) IS seriouslymisleading (9-506(b))If search of records under Debtor's name (which must comply w/ 9-503(a)),using the standard search logic of the filing office would disclose the fin stmt,the name is NOT seriously misleading (9-506(c))

Error/Omission Related to SP's NameError is never Seriously misleading (Cmt 2 to 9-506)POLICY

Even w/ incorrect SP name, the existence of the fin stmt serves notificationpurpose

Filing does NOT occur if the Filing Office Refuses to Accept Because:

Failure to Provide Adequate Forms/FeesFiler uses an unauthorized form or method of communicating the fin stmt(9-516(b)(1))Filer doesn't include the filing fee (9-516(b)(2))

Lack of Information about Secured PartyIn the case of an initial fin stmt or amendment that adds a SP of record, the recorddoes not provide a name and mailing address for the SP of record (9-516(b)(4))

Lack of Information about Debtor

9-516(b)(3) The name of the debtor9-516(b)(3)(C) The last name of an individual debtor

9-516(b)(5): A filing does not occur if the filing office refuses to accept a record thatlacks (A) debtor's mailing address; (B) whether debtors is individual or organization;(C) if so, organization type, org jurisdiction, org ID # (or indicate that the debtor hasno org ID)

Note -- see also 9-516(b)(3) re: Amendments and Correction StatementsThe Filing Office's Duty/Discretion to Reject a Filing

The filing office SHALL refuse to accept a record for filing for a reason set forth in9-516(b)The filing office MAY refuse to accept a record ONLY for a reason set forth in 9-516(b)

i.e.. not for any other reason (like, they just felt like it..)What if the Filing Office makes a mistake?

ACCEPTING A Filing It Could/Should Have Rejected (under 9-516(b))?Still effective -- "Except as otherwise provided in subsection (b), communication of arecord to a filing office and tender of the filing fee or acceptance of the record by thefiling office CONSTITUTES FILING (9-516(a))"9-338 What Happens (i.e. what is the Priority of) Sec Int (or Ag Lien) Perfected byFiled Fin Stmt that provides Certain Incorrect Info

If a security interest or agricultural lien is perfected by a filed financing statementproviding information described in Section 9-516(b)(5) which is incorrect at thetime the financing statement is filed:

(1) the sec int / ag lien is SUBORDINATE to a conflicting perfected securityinterest in the collateral to the extent that the holder of the conflicting security


21 of 65 5/7/2013 3:42 PM

interest gives value in reasonable reliance upon the incorrect information; and(2) a purchaser, other than a secured party, of the collateral takes free of thesec int or ag lien to the extent that, in reasonable reliance upon the incorrectinformation, the purchaser gives value and, in the case of chattel paper,documents, goods, instruments, or a security certificate, receives delivery ofthe collateral.

Wrongly REJECTING A Financing Stmt (i.e. for a non-9-516(b) reason)?The filing is effective (9-516(d)), as long as it is submitted in proper form, with thefiling fee

Exception:The fin stmt is NOT effective against a purchaser of the collater that gives valuein reasonable reliance upon the absence of the record from the files

Improperly Indexing a Record in the Wrong Place?The filed record is STILL EFFECTIVE (9-517)Note -- with computers, this should be increasingly rare

BUT What happens if the filing office does not correctly INDEX the record after it isreceived (i.e. filing office messes up?)In re Hergert (BC Idaho 2002)

FPPacific (SP) filed financing statement identifying SP as Pacific One Bank andlisting two business addresses (ID, OR) for the SP. Pacific then merged into theBank such that the name and one of the addresses on the FS is now incorrect.

I

RAHHELD: Errors in the SPs name and address are NOT SERIOUSLY MISLEADING,do NOT vitiate the EFFECTIVENESS of the filingAlthough Section 9-502(a) requires a FS to provide the name of the SP, an error inthe name of the SP is not seriously misleadingSearches are NOT conducted under the SPs name; no filing is needed to continuethe perfected status of a SI after it is assignedArticle 9 recognizes that a limited function is served by the inclusion on the FS of theSPs address; it only indicates a place to which others can send any requirednotifications

Where Do You File?

For Non-Real Property-Related Collateral9-501(a)(2) - Central Filing Office = usu office of Secy of State

For Real-Property Related Collateral9-501(a)(1) - In the office where the real property mortgages are recorded

6. Post-Filing ChangesEvents occurring after a financing statement has been filed can affect the accuracy ofinformation contained in itNonetheless, Article 9 generally does not care about post-filing changes and informationEXCEPT for seriously misleading debtor name changes and Article 9 does not care aboutchanges of collateral ownership EXCEPT where the new assignee lives in a different


22 of 65 5/7/2013 3:42 PM

jurisdictiona. Transfer of Collateral

For Transfers Not Affected by a Change in Governing Law/Jurisdiction

9-315(a)(1) - Effect of DISPOSITION of Collateral on the Security Interest(unless otherwise provided in 2-403(2)) a security interest or agricultural liencontinues in collateral notwithstanding sale, lease, license, exchange, or otherdisposition thereof UNLESS the secured party authorized the disposition free ofthe security interest or agricultural lien9-315(a)(2) - The sec int also attaches to "any identifiable proceeds of collateral"

9-507(a) - Effect of Transfer of Collateral on the Continued Effectiveness of a Fin StmtA filed financing statement remains effective with respect to collateral that is sold,exchanged, leased, licensed, or otherwise disposed of and in which a securityinterest or agricultural lien continues, even if the secured party knows of or consentsto the disposition.

POLICYSaves the SP monitoring costs; imposes search costs on 3rd parties dealing w/transferees in collateral

For Transfers to a Person Who Becomes a Debtor and Is Located in a New JurisdictionThe sec int remains perfected for ONE YEAR after the transfer 9-316(a)(3)i.e. the SP must monitor the collateral

b. Name Change"Pure" Name Change: Only the businesss name changes; i.e. Business entity has notchanged

9-507(b) - Name Changes Are Generally Not Misleading(Except as otherwise provided in subsection (c) and Section 9-508) A financingstatement still effective, even if after the financing statement is filed, the informationprovided in the financing statement becomes seriously misleading under Section9-506.

9-507(c) - Change in Debtor's NameIf a debtor so changes its name that a filed financing statement becomes seriouslymisleading under Section 9-506:(1) the financing statement is effective to perfect a security interest in collateralacquired by the debtor before, or within four months after, the change; and(2) the financing statement is not effective to perfect a security interest in collateralacquired by the debtor more than four months after the change, unless anamendment to the financing statement which renders the financing statement notseriously misleading is filed within four months after the change.

c. Change in Business Structure

9-102(a)(56) - Definition of New DebtorA person/org is a New Debtor if it "becomes bound as debtor" under 9-203(d) by a secagmt previous entered into by another person

POLICYThe New Debtor rules benefit the secured creditor of the original debtor -- makestheir lives easierN.D. is bound to the original O.D.'s sec agmt, and the O.D.'s sec int remains


23 of 65 5/7/2013 3:42 PM

perfected in old and newly acquired collateral w/o the filing of a new fin stmt, for atleast 4 months

Attachment

A person becomes bound as debtor by a security agreement entered into anotherperson (i.e. a "new debtor") if, by operation of law other than this article or by contract:9-203(d)

(1) the security agreement becomes EFFECTIVE to create a SI in the personsproperty; OR(2) the person becomes generally obligated for the obligations of the other person,including the obligation secured under the security agreement, and acquires orsucceeds to all or substantially all of the assets of the other person

9-203(e) - Is a New Sec Agmt Necessary for New Debtor?(2) If Org/Person B is a New Debtor, bound by the sec agmt by Org/Person A, thenB does NOT need to enter into a new sec agmt w/ SP(also, (1) - the agreement satisfies subsection 9-203(b)(3) with respect to existing orafter-acquired property of the new debtor to the extent the property is described inthe agmt)

NOTE: This would really only come into play if there are no other secured parties, nobankruptcy in this case, you could still pick up your secured interests withoutperfectionA common manner for a successor entity to become bound as a debtor is for it toagree to become liable for all debts of its predecessor at the time when it receivestransfer of its predecessors assets

Perfection

9-508(a) - Is a New Fin Stmt Necessary for New Debtor?The fin stmt naming the ORIGINAL DEBTOR is EFFECTIVE to perfect a sec int inthe collateral of the NEW DEBTOR, to the extent that the fin stmt would have beeneffective had the original debtor acquired the collateral.

This includes existing collateral held by the new debtor covered by the originaldebtor's sec agmt, not just the collateral acquired from the original debtor

BUT EXCEPTION -- 9-508(b) - Fin Stmt Becoming Seriously MisleadingIf the difference between the name of the original debtor and that of the newdebtor causes a filed financing statement that is effective under subsection (a) tobe seriously misleading under Section 9-506:(1) the financing statement is effective to perfect a security interest in collateralacquired by the new debtor before, and within four months after, the newdebtor becomes bound under Section 9-203(d); and(2) the financing statement is not effective to perfect a security interest incollateral acquired by the new debtor more than four months after the newdebtor becomes bound under Section 9-203(d) unless an initial financingstatement providing the name of the new debtor is filed before the expiration ofthat time.

9-508 - Effectiveness of Fin Stmt if New Debtor becomes bound by sec agmt"New debtor" means a person that becomes bound as debtor under Section9-203(d) by a security agreement previously entered into by another person.(9-102(a)(56))


24 of 65 5/7/2013 3:42 PM

9-508(a) - Except as otherwise provided in this section, a filed financingstatement naming an original debtor is effective to perfect a security interest incollateral in which a new debtor has or acquires rights to the extent that thefinancing statement would have been effective had the original debtor acquiredrights in the collateral.

9-508(b) - If the difference between the name of the original debtor and that of thenew debtor causes a filed financing statement that is effective under subsection (a)to be seriously misleading under Section 9-506:

(1) the financing statement is effective to perfect a security interest in collateralacquired by the new debtor before, and within four months after, the newdebtor becomes bound under Section 9-203(d); AND(2) the financing statement is not effective to perfect a security interest incollateral acquired by the new debtor more than four months after the newdebtor becomes bound under Section 9-203(d) unless an initial financingstatement providing the name of the new debtor is filed before the expiration ofthat time.

Priority9-326(a) Subject to subsection (b), a security interest created by a new debtor, whichis perfected by a filed financing statement that is effective solely under Section 9-508in collateral in which a new debtor has or acquires rights is subordinate to a securityinterest in the same collateral which is perfected other than by a filed financingstatement that is effective solely under Section 9-508. 9-326(b). The other provisions of this part determine the priority among conflictingsecurity interests in the same collateral perfected by filed financing statements that areeffective solely under Section 9-508. However, if the sect agmts to which a newdebtor became bound as debtor were not entered into by the SAME ORIGINALDEBTOR, the conflicting security interests rank according to priority in time ofthe new debtors having become bound.

D. Perfection by Possession or DeliveryNo authenticated sec agmt is requiredBoth attachment (9-203(b)(3)(B)) and perfection (9-313(a)) occur when a secured party takespossession of colateral

What Is Perfection by Possession 9-313(a)a secured party may perfect a security interest in negotiable documents, goods,instruments, money, or tangible chattel paper by taking possession of the collateralBUT NOT General Intangibles or Accounts

Perfection by Delivery 9-313(a)A secured party may perfect a security interest in certificated securities by taking delivery ofthe certificated securities under Section 8-301

1. Possession by AgentPossession by an AGENT of the SP (for the purpose of possessing on behalf of the SP)CONSTITUTES POSSESSION (see 9-313, cmt 3)

In re RolainFPIRAH

2. Possession by Bailee


25 of 65 5/7/2013 3:42 PM

Pre-RevisionIf Debtor's property was in possession of a non-agent bailee, the D and SP could create aperfected sec int in the property

How to Perfect

Negotiable Documents of TitlePerfection could occur either in the document or in the goods

All other bailments

Perfection could occur if1. secured creditor had the bailee issue a document of2. notified the bailee of its sec int, OR3. filed as to the goods

Post-Revision

What types of collateral can have perfected sec ints?

9-312(a) -> A sec int in the following types of collateral may be perfected BY FILINGChattel PaperNegotiable Documents

Instruments9-102(a)(47) - means a negotiable instrument or any other writing that evidencesa right to the payment of a monetary obligation, is not itself a security agreementor lease, and is of a type that in ordinary course of business is transferred bydelivery with any necessary indorsement or assignment.

Investment Property

How to Perfect Sec Int in goods held by 3rd party

9-313(c) - SP does NOT have a perf sec int in property that a 3rd party possessUNLESS:

1. The person acknowledges that it holds possession of the collateral for the SPAND2. The acknowledgement is in an authenticated record (i.e. signed writing ORauthenticated electronic record)

Goods covered by negotiable document

9-312(c) - While goods are in the possession of a bailee that has issued anegotiable document covering the goods:

(1) a security interest in the goods may be perfected by perfecting a securityinterest in the document; AND(2) a security interest perfected in the document has priority over any securityinterest that becomes perfected in the goods by another method during that time.

Goods covered by non-negotiable document

9-312(d) - While goods are in the possession of a bailee that has issued anonnegotiable document covering the goods, a security interest in the goods maybe perfected by:

(1) issuance of a document in the name of the secured party; OR(2) the bailee's receipt of notification of the secured party's interest; OR(3) filing as to the goods.


26 of 65 5/7/2013 3:42 PM

Rights of 3rd Party Bailee9-313(f) - If 3rd party is instructed by debtor and SP to acknowledge that it holdspossession for the SP, the 3rd party may decline.3rd party NOT required to acknowledge that it holds the property for the SP

Duties of 3rd Party in possession of collateral

9-313(g) - If the 3rd person does acknowledge that it holds possession for the SP, thenature of its duties is left to:

(1) agreement of the parties, OR(2) other applicable law

When does Perfection by Possession Occur?9-313(d) - If perfection of a security interest depends upon possession of the collateral by asecured party, perfection occurs no earlier than the time the secured party takes possession.

How Long does Perfection by Possession Last? 9-313(d) - If perfection of a sec int depends on possession of collateral by a secured

party, perfection continues only while the secured party retains possession.

E. Perfection by Control

Control is an alternative way of perfecting a sec int in the following types of collateral:

Deposit Accounts (9-104)9-104: A secured party has control of a deposit account if:

(1) the secured party is the bank with which the deposit account is maintained;(2) the debtor, secured party, and bank have agreed in an authenticated record that thebank will comply with instructions originated by the secured party directing dispositionof the funds in the deposit account without further consent by the debtor; or(3) the secured party becomes the bank's customer with respect to the depositaccount.

Electronic Chattel Paper (9-105)9-105: A secured party has control of electronic chattel paper if the record or recordscomprising the chattel paper are created, stored, and assigned in such a manner that:

(1) a single authoritative copy of the record or records exists which is unique,identifiable and, except as otherwise provided in paragraphs (4), (5), and (6),unalterable;(2) the authoritative copy identifies the secured party as the assignee of the record orrecords;(3) the authoritative copy is communicated to and maintained by the secured party orits designated custodian;(4) copies or revisions that add or change an identified assignee of the authoritativecopy can be made only with the participation of the secured party;(5) each copy of the authoritative copy and any copy of a copy is readily identifiable asa copy that is not the authoritative copy; AND(6) any revision of the authoritative copy is readily identifiable as an authorized orunauthorized revision.

Investment Property (9-106)Letter-of-credit rights (9-107)

9-107: A secured party has control of a letter-of-credit right to the extent of any right topayment or performance by the issuer or any nominated person if the issuer or


27 of 65 5/7/2013 3:42 PM

nominated person has consented to an assignment of proceeds of the letter of creditunder Section 5-114(c) or otherwise applicable law or practice.

F. Security Interests in Consumer Goods

1. Consumer Transactcions Under Article 9

Art 9 is subordinate to State Consumer Protection Laws9-201(b)

Art 9 does not determine the validity of waiver of defenses clauses in consumer credittransactions

9-403(e)Special Protection for Defaulting Consumer Debtors

9-620(e)Statutory Damages for Failure to Comply with Provisions on Default in ConsumerTransactions

9-625(c)(2)Limitations on the Effects of After-Acquired Property Clauses

9-204(b)(1)POLICY

Prevent a seller from adding on new sales to the balances of old ones merely by usingan after-acquired property clause in the original sec agmtBut it failed (see CB p. 107)

2. Perfection of Sec Ints in Consumer Goods

Filing not required for Purchase-Money Sec Ints

9-309(1) - A Purchase-Money Sec Int in CONSUMER GOODS is automatically perfectedat the time of attachment; no filing required

POLICY(1) Consumer transactions are usu small; i.e. the expense of filing would costsignificantly more(2) Usually numerous consumer transactions -- filing would cause undue burden onthe filing system(3) The pre-Code rules in states didn't require filing(4) Parties to consumer transactions are less likely to search the records

Goods are always classified from the Debtor's POVEquipmentInventoryConsumer GoodsFarm Products

But filing IS required for non-purchase-money sec ints in consumer goodsNOTE: For motor vehicles, boats, etc., automatic perfection does not apply under 9-309.Must comply with certificate of title laws

9-3099-320

G. Choice of Law


28 of 65 5/7/2013 3:42 PM

1. Location of Debtor Governs Tangible and Intangible Collateral

Former Art 9The problem with Former Art 9 = complicated rules

For "ordinary goods"Situs Test: The fin stmt had to be filed in the state where the goods were located

For intangibles (e.g. accounts and general intangibles)Place of filing = location of the debtor

If the proceeds of the sale of goods are intangiblesPlace of filing = Required to be both the location of the goods AND the location of thedebtor (to cover both the goods and the proceeds)

If goods were moved from one state to anotherFollow the goods

If the goods are "mobile" and moved constantly?Place of filing = debtor's location

Revised Art 99-301(1) - General Rule = the law of the location of the debtor governs the issues of (1)perfection, (2) the effect of perfection, and (3) priority wrt both tangible and intangiblecollateral, whether perfected by filing or automatically

But there are exceptions to the general rule9-301(2) wrt to possessory security interests, the issues of (1) perfection, (2) the effectof perfection, and (3) priority are governed by a situs test: the location of theCOLLATERAL controls, not the location of the debtor.9-301(3)(C) - wrt nonpossessory perfection of sec ints in tangible property, the law ofthe situs of the COLLATERAL governs the EFFECT of perfection and the PRIORITY,but NOT PERFECTION. Perfection is governed by the law of the location of the debtor9-302 - Deposit Accounts9-3039-3049-305

2. Location of the Debtor

Location of Debtor

IndividualLocation of Debtor = principal residence of debtor

Organization9-307(b) Location of Debtor = organization's place of business, if it has onlyone. Place = chief executive office if multiple places of business

Unregistered PartnershipLocation of Debtor = Chief Executive Office

"Registered Organization"9-307(e) - A "Registered Organization" organized under state law is located in thestate of organization.

9-102(a)(70) Registered Organization - Limited Partnerships, LLCs, and Corporations(officially, it's "means an organization organized solely under the law of a single


29 of 65 5/7/2013 3:42 PM

State or the United States and as to which the State or the United States mustmaintain a public record showing the organization to have been organized.")

9-307(c) - Limitation to 9-307(b)'s location of debtor rule for debtors outside US9-307(b)'s location test applies to non-US debtors only when the foreign jurisdiction'slaw generally requires public record notice of nonpossessory security interests as acondition of priorityIf (b) does not apply (and US debtor), then Location of Debtor = D.C. (District ofColumbia)

If Debtor of Collateral Moves to a Different Jurisdiction

9-316(a) - Continuation of PerfectionA security interest perfected pursuant to the law of the jurisdiction designated inSection 9-301(1) or 9-305(c) remains perfected until the earliest of:

(1) the time perfection would have ceased under the law of that jurisdiction;(2) the expiration of four months after a change of the debtor's location to anotherjurisdiction; or(3) the expiration of one year after a transfer of collateral to a person that therebybecomes a debtor and is located in another jurisdiction.

3. Goods Covered by Certificate of Title

a. The Basic Rules of Perfection

How to Perfect

9-311(a)(2) Fin Stmts ineffectiveFiling a fin stmt is neither necessary nor effective to perfect a sec int in goods

9-311(b) Must Comply w/ Cert of Title StatutesCompliance w/ such a statute is the equivalent to filing a fin stmt. A sec int in suchproperty may be perfected ONLY by compliance

Duration of Perfection9-311(c) Governed by Cert of Title Statutes

Inapplicability to Certain Inventory

9-311(d) - During any period in which collateral subject to a Cert of Title statute isinventory held for sale/lease by a person or leased by that person as lessor, and thatperson is in the business of selling goods of that kind, this section does not apply to asecurity interest in that collateral created by that person.

e.g. car dealerBUT NOTE!! 9-311(d) does not apply to dealers who ONLY lease goods. Eventhough they eventually may sell the goods, they should not be considered "in thebusiness of selling goods of that kind." 9-311, cmt 4

b. What Law Governs Perfection?9-303(c) - The local law of the jurisdiction under whose cert of title the goods are coveredgoverns (1) perfection, (2) the effect of perfection or nonperfection, and (3) the priority ofa sec int in the goods covered by a cert of title from the time the goods become coveredby the cert of title until the goods cease to be covered by the cert of title"

Meeks v. Mercedes Benz Credit CorpFPI


30 of 65 5/7/2013 3:42 PM

RAH

c. Change in Debtor's Location

In re BakerFPIRAH

See also 9-316(d)See also 9-316(e)See also 9-337(1)

NEW SECTIONS ADDED IN 2010 AMENDMENTS (see supp book), p. 9319-316(h)9-316(i)Example 9

Chapter 3 - Priority

A. Introduction

Default Priority Rule: Security Interests are Primary

9-201(a) - Except as provided "otherwise" in the UCC, a sec agmt is effective according toits terms btwn the parties, against purchasers of the collateral, and against creditors

i.e. even an unperfected sec int is prior to the rts of unsecured creditors and to any otherpurchaser or creditor, unless the UCC provides "otherwise"

B. First-to-File Rule

GoalsIdenfity the property claimedIdentify the priority of claimants

1. Conflicting Security Interests

Under Traditional LawBasic priority rule was: First in time, first in rightProblem is: this dictum is too imprecise to deal w/ a notice filing sys in which filing &attachment of sec int can happen at diff times

Current LawBasic priority rule is: "first to file-or-perfect"

9-322(a) - Except as otherwise provided in this section [9-322], priority among conflictingsec ints/ag liens in the same collateral is determined as follows:

(1) Perf vs Perf: Conflicting PERFECTED sec ints/ag liens rank according to priorityin time of filing OR perfection. i.e. priority is given to the earlier of the time of firstfiling or first perfecting

Note: Priority Rules govern ag liens

Ag lien = statutorily created property rts in frm products that secure obligationsincurred by the debtor in connection w/ its farming ops

Not consensually created sec ints; but Rev Art 9 considers the holder of an aglien to be a "secured party"Other law (not UCC) governs ag lien creation. But Art 9 governs perfection and


31 of 65 5/7/2013 3:42 PM

priority

(2) Perf vs Unperf: A perfected sec int/ag lien has priority over a conflictingunperfected security interest or agricultural lien.(3) Unperf vs Unperf: If all conflicting SPs (sec ints/ag liens) are unperfected, thefirst sec int/ag lien to attach or become effective has priority.

9-317(a) - A sec int/ag lien is SUBORDINATE TO the rights of(1) a person entitled to priority under 9-322; AND(2) except as otherwise provided in subsec (e) [wrt PMSIs], a person who becomes alien creditor before the earlier of:

(A) the time the sec int/ag lien is perfected; OR(B) one of the conditions in 9-203(b)(3) is met AND a fin stmt covering the collateralis filed

Proceeds9-322(b) The time of filing or perfection of a sec int in collateral is deemed to be thetime of filing or perfection of the sec int in the proceeds

Supporting Obligations9-322(b) The time of filing or perfection of a sec int in collateral supported by asupporting obligation is deemed to be the time of filing or perfection of the sec int in thesupporting obligation

2. Future Advances

Definition:

Art 9 doesn't define "advance"The term connotes value given by the creditor to the debtor, or from which the debtorbenefitsi.e. "advance" is similar to "value"

"Future Advance" is NOT "after-acquired property"Future advances concern the type of debt (future advances) secured by the debtor'sassetsAfter-acquired property clauses concern the collateral (after-acquired) that secures thedebt

Rules

See 9-203 and 9-204: If a sec agmt includes both (1) an after-acquired property clauseand (2) future advances clause, then:

1 - the sec int automatically attaches to any after-acquired property at the time whenthe debtor acquires rights in this collateral, AND2 - the collateral secures all future advances made by the sec party to the debtor

How to secure Future Advances

Dragnet clauseA provision in a sec agmt that secures both (1) a specific loan and (2) future loansmade by creditor to debtor w/ same collateralClause provides for "cross-collateralization": collateral securing the specific loan alsosecures future advancesDragnet clauses are generally considered valid unless specific grounds forinvalidating them exist


32 of 65 5/7/2013 3:42 PM

See 9-323, cmt 3 - Explains Relationship of 3-22 and 3-23 (titled FutureAdvances), CB p. 128

Shelby County State Bank v. Van Diest Supply

FPDebtor filed for bankruptcy. Van Diest (SP#1) takes a SI in debtors inventory based onexecuted SA which provided for a blanket lien on all inventory, notes and accountsreceivable, etc. Two years later, SP#1 and Debtor entered into new SA, whichdescribed the SI as being in all inventory, including but not limited to agriculturalchemicals, fertilizers, and fertilizer materials sold to Debtor by Van Diest Supply Co.whether now owned or hereafter acquired Bank (SP#2) then takes a SI in all ofdebtors inventory pursuant to an executed SA and a filed FS.

IWho has priority?

RAHHELD: SP #1 HAS PRIORITY IN INVENTORY sold to Debtor by Van Diest (SP#1)Under typical Article 9 priority rules, SP #1 would have priority in EVERYTHING -But,Bank successfully points out that the language of the second SA indicates that theSP#1s SI is only in all inventory sold to Debtor by Van Diest (phrase sold to Debtor byVan Diest modifies including but not limited to)Court agrees that this language is ambiguous -> language should be construedAGAINST the drafter (SP#1); Thus, SP#1s SI should be restricted to inventory sold toDebtor by Van DiestSupported by evidence from several notices indicating that Van Diest was onlyinterested in having a PMSI only in the inventory it sold to DebtorSA should provide clear notice to the world as to what property encumbered

See also 9-312

3. Financing Statement as an Umbrella

Previous views

One viewIn order for a subsequent future advance clause to have 9-312 priority, the original secagmt must have a future advance clause (Coin-o-matic case, CB pp. 129-130)

Another view: Fin stmt = umbrella -- the fin stmt gives the world notice of present andfuture sec ints in the collateral

Where (1) an original sec agmt is executed, a debt is created, and a fin stmt describingcollateral is filed; and (2) a later advance is made with a sec agmt covering the samecollateral as the original sec agmt, the lender has a perfected sec int in the collateralfor both the original debt and also the later advancePolicy stated on CB p. 131

Current View

A sec int can be perfected by a future advance; thus 9-322 gen rule governs priority offuture advances

i.e. priority is generally NOT based on the time when the future advance is given

Exception: 9-323(a) Governs When Priority IS based on the time of advanceExcept as otherwise provided in subsection (c), for purposes of determining the priority


33 of 65 5/7/2013 3:42 PM

of a perfected security interest under Section 9-322(a)(1), perfection of the securityinterest dates from the time an advance is made to the extent that the security interestsecures an advance that:

(1) is made while the security interest is perfected only:(A) under Section 9-309 when it attaches; OR(B) temporarily under Section 9-312(e), (f), or (g); AND

(2) is not made pursuant to a commitment entered into before or while the securityinterest is perfected by a method other than under Section 9-309 or 9-312(e), (f), or(g).

4. Position of First-to-File Secured PartyGenerally: Secured Creditors should never allow themselves to conflict w/ another securedcreditor who has filed first, UNLESS they have taken precautions

PrecautionsJunior Secured Creditor gets a PMSI (Purchase-Money Sec Int)Senior Secured Creditor agrees to subordinate its security interest in part or in whole tothat of the jr creditor

Subordination agmts are allowed by and deemed enforceable by 9-339 and BC 510

Jr creditor has bought out Sr creditor

C. Purchase-Money Priority

1. Collateral Other Than Inventory/Livestock

Definition

A security interest in goods is a PMSI

(1) to the extent that the goods are "purchase money collateral" wrt to that sec inti.e. the goods secure a purchase-money obligationi.e. the PMSI is always created in connection w/ a new acquisition of goods by thedebtor. The goods become collateral ("purchase-money" collateral) for the obligation("purchase-money obligation) to pay the purchase price of the goods to the seller, orto pay back a 3rd party who financed the debtor's acquisition of those goods

(2) if the security interest is in inventory that is or was purchase-money collateral, alsoto the extent that the security interest secures a purchase-money obligation incurredwith respect to other inventory in which the secured party holds or held apurchase-money security interest; and also to the extent that the security interest secures a purchase-money obligationincurred with respect to software in which the secured party holds or held apurchase-money security interest.

Purchase-Money Obligation = one incurred

(i) as all or part of the price of collateral [Seller Purchase-Money Obligation]e.g. seller sells goods to buyer and takes a sec int in the goods to secure the unpaidprice; OR

(ii) for value given to enable the debtor to acquire rights in or use of the collateral (if thevalue is in fact used that way) [Lender Purchase Money Obligation]

e.g. lender lends money to debtor to enable it to buy goods

Purchase-Money Obligation includes all expenses incurred in connection w/ purchase ofcollateral, not just the purchase price


34 of 65 5/7/2013 3:42 PM

NOTE! PMSI is limited to goods and software

a. Purchase-Money Security Interests (PMSI)Main Priority Rule

9-324(a) - PMSI in CollateralExcept as otherwise provided in subsection (g), a perfected purchase-moneysecurity interest in goods other than inventory or livestock has priority over aconflicting security interest in the same goods

9-324(a) - PMSI in ProceedsExcept as otherwise provided in Section 9-327, a perfected security interest in itsidentifiable proceeds also has priority, if the purchase-money security interest isperfected when the debtor receives possession of the collateral or within 20 daysafterward.

POLICYPMSI priority is a way for debtors to break the monopoly of the first party to file overthe debtor's credit supply

Brodie Hotel Supply, Inc. v. United States (CA9 1970)FP

Brodie sold the restaurant equipment to Standard. Standard went bankrupt andBrodie left it in the restaurant. With Brodies consent, Lyon took possession of therestaurant and began operating it on June 1, 1964. Throughout the summer of1964, Brodie and Lyon negotiated over the price/terms under which Lyon was topurchase the equipment. On November 2nd, Bank loaned $$$ to Lyon and tookan SI in the restaurant equipment. Two days later, the Bank filed a FS. OnNovember 12th, Brodie delivered a bill of sale to Lyon and took a SI in theequipment. Brodie filed a FS on November 23rd.

IWho has priority?? Depends on when debtor (Lyon) took possession

RAHHELD: Brodie has priority (PMSI)-Under traditional priority rules, Bank would win out but, this is a seller typepurchase money obligation-Under old rules, PMSI perfected at the time the debtor receives possession ofthe collateral or within 10 days after the debtor receives possession)-Although Bank alleged that Lyon became a debtor and the equipment becamecollateral when Lyon took possession of the restaurant, the Court disagreed-Here, Lyon did not become an Article 9 debtor until November 12 (that is whenhe officially purchased the equi

Secured Transactions Outline

Documents

Transcript of Secured Transactions Outline