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Secured Transactions Assignment 23

Secured Transactions Assignment 23. Maintaining Perfection Through Changes of Name, Identity, and Use. The Big Picture. Part Two: The Creditor Third Party Relationship Chapter 6: Perfection Chapter 7: Maintaining Perfection Assignment 22: Through lapse and bankruptcy

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Secured Transactions Assignment 23

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  1. Secured TransactionsAssignment 23 Maintaining Perfection Through Changes of Name, Identity, and Use

  2. The Big Picture Part Two: The Creditor Third Party Relationship Chapter 6: Perfection Chapter 7: Maintaining Perfection Assignment 22: Through lapse and bankruptcy Assignment 23: Through changes in name, identity and use of collateral Assignment 24: Through interstate movements of debtors and collateral Chapter 8-9: Priority

  3. The Big Picture Part Two: The Creditor Third Party Relationship Chapter 6: Perfection Chapter 7: Maintaining Perfection Assignment 22: Through lapse and bankruptcy Assignment 23: Through changes in name, identity and use of collateral Assignment 24: Through interstate movements of debtors and collateral Chapter 8-9: Priority

  4. Perfection-maintenance Problem S1 Filing Debtor’s name Collateral description

  5. Perfection-maintenance Problem S1 Filing Changes Name change Sale to new owner Collateral transformed Change of use Proceeds exchange New debtor Debtor’s name Collateral description

  6. Perfection-maintenance Problem S1 Filing S2 Search Changes Name change Sale to new owner Collateral transformed Change of use Proceeds exchange New debtor Debtor’s name Collateral description New name New owner Different description

  7. Perfection-maintenance Problem S1 Filing S2 Search Changes Name change Sale to new owner Collateral transformed Change of use Proceeds exchange New debtor Debtor’s name Collateral description New name New owner Different description Two approaches mixed:

  8. Perfection-maintenance Problem S1 Filing S2 Search Changes Name change Sale to new owner Collateral transformed Change of use Proceeds exchange New debtor Debtor’s name Collateral description New name New owner Different description Two approaches mixed: 1. Filer updates the filings as changes occur

  9. Perfection-maintenance Problem S1 Filing S2 Search Changes Name change Sale to new owner Collateral transformed Change of use Proceeds exchange New debtor Debtor’s name Collateral description New name New owner Different description Two approaches mixed: 1. Filer updates the filings as changes occur 2. Searcher must discover history of name and description

  10. Name Changes, §9-507(c) Filing

  11. Name Changes, §9-507(c) Filing A seriously misleading name change creates a four-month window.

  12. Name Changes, §9-507(c) Seriously misleading name change Filing 4 months A seriously misleading name change creates a four-month window.

  13. Name Changes, §9-507(c) Seriously misleading name change Filing Amendment 4 months A seriously misleading name change creates a four-month window. If filer amends within four months, filing is valid for all collateral

  14. Name Changes, §9-507(c) Seriously misleading name change Filing Amendment 4 months If collateral is acquired this date A seriously misleading name change creates a four-month window. If filer amends within four months, filing is valid for all collateral

  15. Name Changes, §9-507(c) Seriously misleading name change Filing Now 4 months If collateral is acquired this date A seriously misleading name change creates a four-month window. If filer amends within four months, filing is valid for all collateral If filer does not amend within four months, filing is valid against collateral acquired before the end of four months

  16. Name Changes, §9-507(c) Seriously misleading name change Filing Now 4 months If collateral is acquired this date A seriously misleading name change creates a four-month window. If filer amends within four months, filing is valid for all collateral If filer does not amend within four months, filing is valid against collateral acquired before the end of four months

  17. Name Changes, §9-507(c) Seriously misleading name change Filing Amendment 4 months If collateral is acquired this date If acquired this date A seriously misleading name change creates a four-month window. If filer amends within four months, filing is valid for all collateral If filer does not amend within four months, filing is valid against collateral acquired before the end of four months If filer amends late, amendment is effective, Comment 4. but priority is only from the Amendment

  18. Change in owner (debtor), §9-507(a) S1 files against Sam Seller

  19. Change in owner (debtor), §9-507(a) Sam sells the collateral to Beth Buyer S1 files against Sam Seller

  20. Change in owner (debtor), §9-507(a) Sam sells the collateral to Beth Buyer S1 files against Sam Seller “A filed financing statement remains effective with respect to collateral that is sold . . . even if the secured party knows of . . . the disposition.”

  21. Change in owner (debtor), §9-507(a) Sam sells the collateral to Beth Buyer Beth Buyer borrows from S2 S1 files against Sam Seller “A filed financing statement remains effective with respect to collateral that is sold . . . even if the secured party knows of . . . the disposition.” S1 filing is effective. How would S2 find it?

  22. Change in owner (debtor), §9-507(a) Sam sells the collateral to Beth Buyer Beth Buyer borrows from S2 S1 files against Sam Seller “A filed financing statement remains effective with respect to collateral that is sold . . . even if the secured party knows of . . . the disposition.” S1 filing is effective. How would S2 find it? Comment 3. “[A]ny person seeking to determine whether a debtor owns collateral free of security interests must inquire as to the debtor’s source of title and, if circumstances seem to require it, search in the name of a former owner.”

  23. Change in owner (debtor), §9-507(a) Sam sells the collateral to Beth Buyer Beth Buyer borrows from S2 S1 files against Sam Seller “A filed financing statement remains effective with respect to collateral that is sold . . . even if the secured party knows of . . . the disposition.” S1 filing is effective. How would S2 find it? Comment 3. “[A]ny person seeking to determine whether a debtor owns collateral free of Every searcher must inquire as to the debtor’s source of title and, if circumstances seem to require it, search in the name of a former owner.”

  24. Changes in collateral: Physical/use Physical/use change in collateral Filing Search

  25. Changes in collateral: Physical/use Physical/use change in collateral Filing Search §9-507(b). A financing statement is not rendered ineffective if, after the financing statement is filed, the information provided in the financing statement becomes seriously misleading under Section 9-506.

  26. Changes in collateral: Physical/use Physical/use change in collateral Filing Search §9-507(b). A financing statement is not rendered ineffective if, after the financing statement is filed, the information provided in the financing statement becomes seriously misleading under Section 9-506. The financing statement remains effective

  27. Changes in collateral: Physical/use Physical/use change in collateral Filing Search §9-507(b). A financing statement is not rendered ineffective if, after the financing statement is filed, the information provided in the financing statement becomes seriously misleading under Section 9-506. The financing statement remains effective The secured party may not remain perfected. E.g., auto parts become an auto; auto use changed from equipment to inventory.

  28. Changes in collateral: Proceeds Collateral exchanged for proceeds Filing Search

  29. Changes in collateral: Proceeds Collateral exchanged for proceeds Filing Search Three kinds of changes:

  30. Changes in collateral: Proceeds Collateral exchanged for proceeds Filing Search Three kinds of changes: Type 0: The description still indicates the collateral (No change)

  31. Changes in collateral: Proceeds Collateral exchanged for proceeds Filing Search Three kinds of changes: Type 0: The description still indicates the collateral (No change) Type 1: The description is seriously misleading, but the filing is in the right office for the new collateral.

  32. Changes in collateral: Proceeds Collateral exchanged for proceeds Filing Search Three kinds of changes: Type 0: The description still indicates the collateral (No change) Type 1: The description is seriously misleading, but the filing is in the right office for the new collateral. Type 2: The filing is in the wrong office for the new collateral

  33. Changes in collateral: Proceeds 9-315(c). A security interest in proceeds is a perfected security interest if the security interest in the original collateral was perfected.

  34. Changes in collateral: Proceeds 9-315(c). A security interest in proceeds is a perfected security interest if the security interest in the original collateral was perfected. (d) A perfected security interest in proceeds becomes unperfected on the 21st day after [attachment] unless

  35. Changes in collateral: Proceeds 9-315(c). A security interest in proceeds is a perfected security interest if the security interest in the original collateral was perfected. (d) A perfected security interest in proceeds becomes unperfected on the 21st day after [attachment] unless: (1) The following conditions are satisfied: (A) a filed financing statement covers the original collateral (B) . . . a security interest [in the proceeds] may perfected by filing in [that same office] (C) the proceeds are not acquired with cash proceeds

  36. Changes in collateral: Proceeds 9-315(c). A security interest in proceeds is a perfected security interest if the security interest in the original collateral was perfected. (d) A perfected security interest in proceeds becomes unperfected on the 21st day after [attachment] unless: (1) The following conditions are satisfied: (A) a filed financing statement covers the original collateral (B) . . . a security interest [in the proceeds] may perfected by filing in [that same office] (C) the proceeds are not acquired with cash proceeds (2) the proceeds are identifiable cash proceeds;or

  37. Changes in collateral: Proceeds 9-315(c). A security interest in proceeds is a perfected security interest if the security interest in the original collateral was perfected. (d) A perfected security interest in proceeds becomes unperfected on the 21st day after [attachment] unless: (1) The following conditions are satisfied: (A) a filed financing statement covers the original collateral (B) . . . a security interest [in the proceeds] may perfected by filing in [that same office] (C) the proceeds are not acquired with cash proceeds (2) the proceeds are identifiable cash proceeds; or (3) the security interest in the proceeds is perfected . . . when the security interest attaches or within 20 days . . .

  38. More Big Picture Perfection requires: 1. Attachment and 2. Compliance with perfection requirements §9-308(a). [A] security interest is perfected if it has attached and all of the application requirements for perfection in Sections 9-301 through 9-316 have been satisfied. If secured party doesn’t have a security interest, secured party isn’t perfected.

  39. Problem 23.1, page 407 GBT is monitoring collateral of Bonnie’s Boat World, Inc. The description is: “inventory, accounts, and chattel paper”

  40. Problem 23.1, page 407 GBT is monitoring collateral of Bonnie’s Boat World, Inc. The description is: “inventory, accounts, and chattel paper” a. Bonnie took an inventory boat home; used it personally. Is the boat still inventory? §9-102(a)(48)

  41. Problem 23.1, page 407 GBT is monitoring collateral of Bonnie’s Boat World, Inc. The description is: “inventory, accounts, and chattel paper” a. Bonnie took an inventory boat home; used it personally. Is the boat still inventory? §9-102(a)(48) No.

  42. Problem 23.1, page 407 GBT is monitoring collateral of Bonnie’s Boat World, Inc. The description is: “inventory, accounts, and chattel paper” a. Bonnie took an inventory boat home; used it personally. Is the boat still inventory? §9-102(a)(48) No. Is GBT still perfected?

  43. Problem 23.1, page 407 GBT is monitoring collateral of Bonnie’s Boat World, Inc. The description is: “inventory, accounts, and chattel paper” a. Bonnie took an inventory boat home; used it personally. Is the boat still inventory? §9-102(a)(48) No. Is GBT still perfected? Type 1 change, inventory to equipment. §9-507(b). No new filing needed. (Assuming no boat certificate of title law.)

  44. Problem 23.1, page 407 GBT is monitoring collateral of Bonnie’s Boat World, Inc. The description is: “inventory, accounts, and chattel paper” a. Bonnie took an inventory boat home; used it personally. Is the boat still inventory? §9-102(a)(48) No. Is GBT still perfected? Type 1 change, inventory to equipment. §9-507(b). No new filing needed. (Assuming no boat certificate of title law.) b. Bonnie transferred ownership to herself. What evidence would exist?

  45. Problem 23.1, page 407 GBT is monitoring collateral of Bonnie’s Boat World, Inc. The description is: “inventory, accounts, and chattel paper” a. Bonnie took an inventory boat home; used it personally. Is the boat still inventory? §9-102(a)(48) No. Is GBT still perfected? Type 1 change, inventory to equipment. §9-507(b). No new filing needed. (Assuming no boat certificate of title law.) b. Bonnie transferred ownership to herself. What evidence would exist? Maybe a bill of sale, check.

  46. Problem 23.1, page 407 GBT is monitoring collateral of Bonnie’s Boat World, Inc. The description is: “inventory, accounts, and chattel paper” a. Bonnie took an inventory boat home; used it personally. Is the boat still inventory? §9-102(a)(48) No. Is GBT still perfected? Type 1 change, inventory to equipment. §9-507(b). No new filing needed. (Assuming no boat certificate of title law.) b. Bonnie transferred ownership to herself. What evidence would exist? Maybe a bill of sale, check. Does GBT still have SI? §9-315(a).

  47. Problem 23.1, page 407 GBT is monitoring collateral of Bonnie’s Boat World, Inc. The description is: “inventory, accounts, and chattel paper” a. Bonnie took an inventory boat home; used it personally. Is the boat still inventory? §9-102(a)(48) No. Is GBT still perfected? Type 1 change, inventory to equipment. §9-507(b). No new filing needed. (Assuming no boat certificate of title law.) b. Bonnie transferred ownership to herself. What evidence would exist? Maybe a bill of sale, check. Does GBT still have SI? §9-315(a). Perfected? §9-507(a).

  48. Problem 23.1, page 407 GBT is monitoring collateral of Bonnie’s Boat World, Inc. The description is: “inventory, accounts, and chattel paper” a. Bonnie took an inventory boat home; used it personally. Is the boat still inventory? §9-102(a)(48) No. Is GBT still perfected? Type 1 change, inventory to equipment. §9-507(b). No new filing needed. (Assuming no boat certificate of title law.) b. Bonnie transferred ownership to herself. What evidence would exist? Maybe a bill of sale, check. Does GBT still have SI? §9-315(a). Perfected? §9-507(a). c. BBW trades an inventory boat for a forklift. Does GBT have a security interest in the forklift?Yes. §9-315(a)(2).

  49. Problem 23.1, page 407 GBT is monitoring collateral of Bonnie’s Boat World, Inc. The description is: “inventory, accounts, and chattel paper” a. Bonnie took an inventory boat home; used it personally. Is the boat still inventory? §9-102(a)(48) No. Is GBT still perfected? Type 1 change, inventory to equipment. §9-507(b). No new filing needed. (Assuming no boat certificate of title law.) b. Bonnie transferred ownership to herself. What evidence would exist? Maybe a bill of sale, check. Does GBT still have SI? §9-315(a). Perfected? §9-507(a). c. BBW trades an inventory boat for a forklift. Does GBT have a security interest in the forklift? Yes. §9-315(a)(2).

  50. Problem 23.1, page 407 GBT is monitoring collateral of Bonnie’s Boat World, Inc. The description is: “inventory, accounts, and chattel paper” a. Bonnie took an inventory boat home; used it personally. Is the boat still inventory? §9-102(a)(48) No. Is GBT still perfected? Type 1 change, inventory to equipment. §9-507(b). No new filing needed. (Assuming no boat certificate of title law.) b. Bonnie transferred ownership to herself. What evidence would exist? Maybe a bill of sale, check. Does GBT still have SI? §9-315(a). Perfected? §9-507(a). c. BBW trades an inventory boat for a forklift. Does GBT have a security interest in the forklift? Yes. §9-315(a)(2). Is that security interest perfected?Yes. §9-315(d)(1).

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