A Comprehensive Review of Revised Article 9

Transcription

1 A Comprehensive Review of Revised Article 9

2 A Comprehensive Review of Revised Article 9 Willa E. Gibson Carolina Academic Press Durham, North Carolina

3 Copyright 2007 Willa E. Gibson All Rights Reserved Library of Congress Cataloging-in-Publication Data ISBN ISBN Carolina Academic Press 700 Kent Street Durham, North Carolina Telephone (919) Fax (919) Printed in the United States of America

4 Table of Contents Table of Cases Table of Revised Article 9 U.C.C. Provisions Chapter 1 A Commentary on Article 9 Property 3 I. Introduction 3 II. Tangible Personal Property 4 III. Semi-intangible Personal Property 5 IV. Intangible Personal Property 5 V. Other Transactions 7 A. Leases 7 B. Consignments 8 Chapter 2 Article 9 Personal Property Outline 9 I. Scope of Article 9 9 II. Debtor v. Obligor: 9 III. Personal Property Categories 9 IV. Tangible Property 9 V. Consumer Goods 10 VI. Farm Products 11 VII. Inventory 11 VIII. Equipment 11 IX. Semi-intangible Property 11 X. Documents 11 XI. Chattel Paper 12 XII. Instruments 12 XIII. Letter-of-Credit Rights 13 XIV. Types of Investment Property 13 XV. Deposit Accounts 13 XVI. Commercial Tort Claims 14 XVII. Intangibles 14 XVIII. Consignments 16 XIX. Leases 17 xiii xv v

5 vi TABLE OF CONTENTS Chapter 3 Multiple Choice Questions on Personal Property Scope 21 Question 1 21 Question 2 Apply Hypothetical #1 22 Question 3 Apply Hypothetical #1 23 Question 4 Apply Hypothetical #1 23 Question 5 25 Question 6 25 Question 7 26 Question 8 26 Question 9 27 Question Question Question Question Question Chapter 4 A Commentary on Attachment 33 I. Introduction 33 II. The Enforceability Requirements 33 III. Methods of Evidencing Debtor s Intent 34 A. The Security Agreement 34 B. Control 35 C. Possession 38 IV. The New Debtor Provision 38 Chapter 5 Attachment Outline and Hypotheticals 41 I. Attachment: 41 II. Enforceability Standard 41 III. The Execution of a Security Agreement 42 IV. Possession as a Means of Evidencing Debtor Intent 42 V. Control of Deposit Accounts 43 VI. Control of Investment Property 43 VII. Control of Letter-of-Credit Rights 45 VIII. Control of Electronic Chattel Paper 46 IX. The New Debtor Provision 46 X. Becoming Bound as a New Debtor by Contract 46 XI. Becoming Bound as a New Debtor by Operation of Law 47 XII. Attachment of Proceeds 48

6 TABLE OF CONTENTS vii Chapter 6 A Commentary on Perfection 49 I. Introduction 49 II. Perfection by Filing a Financing Statement 49 III. The Effectiveness of the Financing Statement 51 IV. Change in Debtor s Name, Identity or Business Structure 52 V. Effectiveness of Financing Statement Covering Transferred Collateral 53 VI. General Choice of Law Rules 54 VII. Choice of Law Rules for Investment Property 55 XIV. Choice of Law Rules for Deposit Accounts and Letter-of-Credit Rights 55 VII. Change of Debtor s Location 56 VIII. Other Choice of Law Rules 57 IX. Perfection of Certificate of Title Goods 57 X. Perfection of Property Subject to Federal Statute, Regulation or Treaty 58 XI. Automatic Perfection upon Attachment 59 XII. Perfection by Possession 60 XIII. Perfection by Control 61 Chapter 7 Perfection Outline and Hypotheticals 63 I. Perfection of a Security Interest 63 II. Automatic Perfection of Consumer Goods 63 III. Perfection by Filing a Financing Statement 64 IV. The Mechanics of Filing 64 V. The Sufficiency of a Financing Statement 65 VI. Sufficiency of the Debtor s Name 65 VII. Sufficiency of the Secured Party s Name 66 VIII. Description of Collateral 66 IX. The Debtor s Authorization of a Financing Statement 66 X. Effectiveness of a Financing Statement 66 XI. Change of Debtor s Name 67 XII. Effectiveness of Financing Statement Covering XIII. Transferred Collateral 68 Effectiveness of Financing Statement Involving a New Debtor 69 XIV. Choice of Law Rules 70 XV. The Effect of Perfection and Priority 71 XVI. Movement of the Debtor 71 XVII. Purchaser of Collateral 72

7 viii TABLE OF CONTENTS XVIII. What Constitutes Filing of a Financing Statement 72 XIX. Filing Officer Filing Responsibilities 72 XX. Indexing Errors 73 XXI. Life of the Financing Statement 73 XXII. Bankruptcy Tolling Question 74 XXIII. Perfection for Goods Subject to Certificate of Title Statutes 74 XXIV. Perfection of Property Subject to Federal Law 76 XXV. Perfection by Possession 77 XXVI. Perfection by Control 78 XXVII. Perfection of Proceeds 79 Chapter 8 Multiple Choice Questions on Attachment & Perfection 81 Question 1 81 Question 2 82 Question 3 83 Question 4 83 Question 5 84 Question 6 85 Question 7 86 Question 8 87 Question 9 89 Question Question Question Question Question Question Question Question Question Chapter 9 A Commentary on Priority 99 I. Introduction 99 II. First to File or Perfect Priority Rule 99 III. Proceeds Priority Rule 99 IV. Future Advances 101 V. Future Advances v. Intervening Buyers 101 VI. Future Advances v. Intervening Lien Creditors 102

8 TABLE OF CONTENTS ix VII. Purchase Money Priority Rules in Goods Other Than Inventory 102 VIII. Purchase Money Security Interest in Inventory 102 IX. Purchase Money Security Interest in Livestock 103 X. Purchase Money Security Interest in Software 103 XI. Competing Purchase Money Security Interests 104 XIII. Buyer in the Ordinary Course Priority Rule and Entrustment Rule 104 XII. Licensee in the Ordinary Course Priority Rule 105 XIII. Lessee in the Ordinary Course Priority Rule 105 XVI. Consumer to Consumer Buyer Priority 106 XIV. Dual Debtor Priority Rule 106 XV. New Debtor Priority Rule 107 XVI. Certificate of Title Goods Buyer Priority 107 XVII. Consignment Priority Rule 108 XVIII. Investment Property Priority Rules 109 XIX. Letter-of-Credit Right Priority Rules 109 XX. Chattel Paper Priority Rules 110 XXI. Instrument Priority Rules 111 XXII. Deposit Account Priority 112 XXIII. Other Priority Provisions 112 Chapter 10 Priority Outline and Hypotheticals 113 I. First to File or Perfect Priority 113 II. Future Advance Priority 113 III. Future Advance Intervening Lien Creditors 114 IV. Future Advance Intervening Buyer 115 V. General Purchase Money Priority Rule 115 VI. Purchase Money Security Interest in Inventory 116 VII. Dual Status v. Transformation Rule 117 VIII. Buyer Priority 119 IX. Buyer in the Ordinary Course Rule 119 X. Entrustment Rule 120 XI. Consumer Priority Rule 120 XII. Dual Debtor Priority 121 XIII. New Debtor Priority Rule 122 XIV. Other Than Buyer in the Ordinary Course Priority Rule 123 XV. Licensee in the Ordinary Course Priority Rule 124 XVI. Certificate of Title Buyer Priority Rule 125

9 x TABLE OF CONTENTS XVII. Certificate of Title and Competing Secured Party Priority Rule 126 XVIII. Payment Rights 126 XIX. The Sale of Certain Payment Rights 126 XX. Chattel Paper Priority 130 XXI. Instrument Priority Rules 133 XXII. Deposit Accounts Priority Rules 134 Chapter 11 Multiple Choice Questions on Priority 137 Question Question Question Question Question Question Question Question Question Question Chapter 12 A Commentary on Default 149 I. Introduction 149 II. Available Remedies for Default 149 III. Collection and Enforcement 149 IV. Repossession of Collateral 150 V. Disposition of Collateral 151 VI. Notification of Disposition 151 VII. Distribution of Proceeds 152 VIII. Deficiency Balances in Nonconsumer Transactions 153 IX. Deficiency Balances in Consumer Transactions 154 X. Acceptance of Collateral 155 XI. Remedies for a Secured Party s Noncompliance 156 Chapter 13 Default Outline and Hypotheticals 159 I. Default 159 II. Default Remedies 159 III. Repossession of the Collateral 159 IV. Right of Redemption 160 V. Disposition or Acceptance of Collateral 161 VI. Disposition of Collateral 161 VII. Notification of Disposition 162

10 TABLE OF CONTENTS xi VIII. Junior Secured Parties Repossessing the Collateral 163 IX. Recovery of Deficiency 164 X. Acceptance of Collateral for Full or Partial Satisfaction 164 XI. Remedies for a Secured Party s Noncompliance 167 Chapter 14 Multiple Choice on Default 169 Question Question Question Question Question Question Question Question Question Question Index 179

11 Table of Cases Big Three Motors, Inc. v. Rutherford, 432 So. 2d 483 (Ala. 1983), 160 Chrysler Credit Corp. v. Koontz, Ill. App. 3d 1078, 160 Conseco Finance Services, 754 N.E. 2d (Ind. Ct. App. 2001), 75 Cornelius v. Nuvell Servs. Corp., 256 Ga. App. 171 (?), 160 GE Capital Corp. v. Union Planters Bank, N.A., 290 B.R. 676 (E.D. Mo. 2003), 79 General Electric Co. v. Halmar Distributors, Inc. 968 F.2d 121 (1st Cir. 1992), 74 General Electric Corp. v. Timbrook, 170 W. Va. 143 (W. Va. 1982), 160 In re Cybernetic Services, Inc., 252 F.3d 1039 (9th Cir. 2001), 59, 77 In re Georgetown Steel Co., L.L.C., 318 B.R. 352 (Bankr. D.S.C. 2004), 17 In re Marhoefer Packing Co., Inc., 674 F2d 1139 (7th Cir. 1982), 19 In re Merrill, 258 B.R. 750 (W.D. Mo. 2001), 35 In re Peregrine Entertainment, Ltd., 116 B.R. 194 (C.D. Cal. 1990), 58 In re Taylor, 208 B.R. 720 (M.D. Fla. 1997)., 6 In re Together Development Corporation, 227 B.R. 439 (Bankr. D. Ma. 1998), 59, 77 In re World Auxilliary Power Company, 303 F.3d 1120 (9th Cir. 2002), 59, 77 In re Zaleha, 159 B.R. 581 (Bankr.D. Id 1993), Morgan v. Farmers & Merchants Bank, 856 So.2d 811 (Ala. 2003), 12 Sears, Roebuck & Co. v. Conry, 748 N.E. 2d 1248 (Ill. App. Ct. 2001), 6 Southtrust Bank v. Borg-Warner Acceptance Corp., 760 F.2d 1240 (11th Cir. 1985), 117 Wallace v. Chrysler Credit Corp., 743 F. Supp (W.D. Va. 1990), xiii

12 Table of Revised Article 9 U.C.C. Provisions U.C.C. Provision Page , 16 17, 21 29, 34, 37 38, 42, 46, 48, 83 85, 88, 94 95, 126, , 54, 59, 63 64, 85, 92, 103, , , 43, 93, 112, , 37, , 45, , , 42, , 7 9, 13 14, 26 27, 30 31, 58, 60, , 38 39, 41 42, 44, 46 48, 52 53, 56, 63, 69, 81 83, 88, , , , 57, 70 71, , 74 75, , 70 71, , , 63 64, 85, 113, 121, , 63 64, 71, 76, 96, , 63 64, 74 77, 156, , 79, , , 38, 41 43, 58, 60 61, 63, 76, 78 79, 96, 109, 127, 132 xv

13 xvi TABLE OF REVISED ARTICLE 9 U.C.C. PROVISIONS U.C.C. Provision Page , 61, 63, 79, , 48, 53, 63, 68, 79 80, 93 95, 100, 105, 119, , , 68 69, 71 72, 75 76, 91, 125, , 119, , , 72, , , , , , 103, 109, 111, , 122, 133, , 98, , 109, , 138, , , , 119, , , 119, 123, , 112, , , , , , 64 65, , 65 66, 73, 90, , 65 67, , , , 56, 67 68, 86, 88, 146, , 52 53, 69 70, 88 89, 107, , , 53, 66, 70, , , 73 74, , 72 73

14 TABLE OF REVISED ARTICLE 9 U.C.C. PROVISIONS xvii U.C.C. Provision Page , 73, , , , 160, , 161, , , , , , 154, 161, 164, , , 162, , 162, , , , , 173, , , 161, , , , , 156, , 163, , , 178