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CLICK ON EACH FILE IN THE LEFT HAND COLUMN TO SEE INDIVIDUAL PRESENTATIONS. If no column is present: click Bookmarks or Pages on the left side of the window. If no icons are present: Click V iew, select N avigational Panels, and chose either Bookmarks or Pages. If you need assistance or to register for the audio portion, please call Strafford customer service at 800-926-7926 ext. 10 UCC Secured Transactions: Avoiding Pitfalls in Perfecting Security Interests Protecting Collateral in Bankruptcy and Enforcement Actions presents Today's panel features: Steven O. Weise, Partner, Proskauer Rose, Los Angeles Tuesday, June 30, 2009 The conference begins at: 1 pm Eastern 12 pm Central 11 am Mountain 10 am Pacific The audio portion of this conference will be accessible by telephone only. Please refer to the dial in instructions emailed to registrants to access the audio portion of the conference. A Live 90-Minute Audio Conference with Interactive Q&A

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CLICK ON EACH FILE IN THE LEFT HAND COLUMN TO SEE INDIVIDUAL PRESENTATIONS.

If no column is present: click Bookmarks or Pages on the left side of the window.

If no icons are present: Click View, select Navigational Panels, and chose either Bookmarks or Pages.

If you need assistance or to register for the audio portion, please call Strafford customer service at 800-926-7926 ext. 10

UCC Secured Transactions: Avoiding Pitfalls in Perfecting Security Interests

Protecting Collateral in Bankruptcy and Enforcement Actionspresents

Today's panel features:

Steven O. Weise, Partner, Proskauer Rose, Los Angeles

Tuesday, June 30, 2009

The conference begins at:1 pm Eastern12 pm Central

11 am Mountain10 am Pacific

The audio portion of this conference will be accessible by telephone only. Please refer to the dial in instructions emailed to registrants to access the audio portion of the conference.

A Live 90-Minute Audio Conference with Interactive Q&A

1

UCC Secured Transactions: Avoiding Pitfalls in Perfecting Security Interests

Steve [email protected]

UCC Article 9

2

Does Article 9 apply to the transaction?

Meaning of ‘security interest’ § 1‐201(b)(35)

Hidden secured transactions ‘Dirty’ leases ‘Sales’ transactions

Consider taking protective measures, e.g. filing of financing statement

3

Sales of payment rights – § 9‐109(a)(3)

Accounts Chattel paper Payment intangibles Promissory notes

4

Consignments – § 9‐109(a)(4)

Consignment creates a ‘security interest’ Consignor is ‘secured party’ Consignee is ‘debtor’

5

Agricultural liens – § 9‐102(a)(5)

Not a ‘security interest’ Lien created under non‐Article 9 law Other law governs enforceability 

between the parties Perfection necessary under Article 9 to 

defeat rights of third parties

6

Exclusions – § 9‐109(c)

Government debtors in some states Sales of small amounts of payment rights

7

Attachment – § 9‐203

Security agreement Rights in the collateral Give value

8

Security agreement – § 9‐102(a)(73)

Agreement that creates or provides for a security interest

In transactions covered by Article 9, includes: Consignment agreement Sales agreement

9

Oral security agreement – § 9‐203

‘Pursuant to debtor’s security agreement’ Possession of certificated security Registration of ownership of 

registered certificated security Control

Deposit accounts Electronic chattel paper Investment property Letter‐of‐credit rights

10

Authenticated security agreement

‘Grant’ of security interest – § 9‐203 Consignment or sales language ‘creates 

or provides’ for ‘security interest’ in consignment and sales transactions

Authentication – § 9‐102(a)(7) Allows electronic ‘authentication’ Not subject to:

UETA, or  E‐SIGN

11

Description of collateral – § 9‐108

Must ‘reasonably identify’ the collateral May not use ‘all assets’ description in 

security agreement OK to describe collateral by ‘type’ or 

‘category’ Description by ‘type’ not sufficient: Commercial tort claims Consumer transaction involving 

consumer goods, securities entitlement, or securities account

12

Rights in the collateral or power to transfer – § 9‐203

‘Power’ to transfer Buyer with voidable title Consignee Seller of accounts, chattel paper or 

instruments where buyer is not perfected

Non‐transferable property

13

Anti‐assignment provisions regarding collateral – §§ 9‐406 + 9‐408

LLCs and partnerships Is the collateral ‘investment property’, 

‘general intangible’, or a ‘payment intangible’?

Who is the ‘account debtor’? IP licenses Government permits Application of rules during foreclosure

14

Give value

Meaning of ‘value’ – § 1‐204 ‘Any consideration sufficient to 

support a simple contract’ Commitment to make a loan

To whom? OK if value goes to third party, e.g. 

when security interest granted by guarantor and loan made to borrower

15

Supporting obligations and underlying collateral – § 9‐203

Security interest automatically created when security interest is created in: supported obligation or secured obligation

16

Proceeds – § 9‐203

Security interest in proceeds automatically attaches if security interest has attached to original collateral

Security interest may ‘detach’ after 20 days if certain requirements are not met

17

After‐acquired collateral – § 9‐204

Generally allowed Not permitted: Commercial tort claims Consumer goods, unless acquired 

within ten days of secured party giving value

In security agreement should refer to ‘after‐acquired’ collateral or the like 

18

Future advances – § 9‐204

Security interest may secure future advances

19

Security agreement – default clause

No definition in Article 9 Typical provisions Non‐payment of secured debt Non‐ordinary course transfers of 

collateral Loss of perfection or priority

20

Why perfect the security interest?

Beat other secured parties Beat lien creditors Beat trustee in bankruptcy Beat non‐ordinary course buyers, lessees, 

transferees, and licensees

21

Perfection: automatic – § 9‐309

Sales: Promissory notes

Do not need possession Payment intangibles Not automatic for sales of accounts or 

chattel paper

22

Perfection: financing statement – §9‐310

Available for all types of collateral, except: Money Deposit accounts Letter‐of‐credit rights Required federal or other state filings

Sometimes subject to non‐temporal priority rules

23

Completing the financing statement

Debtor name – §§ 9‐502(a)(1) + 9‐503 Individuals

Nick names Registered organizations

Which document to look at Organizations Trusts

24

Completing the financing statement

Indication of collateral – §§ 9‐502(a)(3) + 9‐504 All asset descriptions

25

Where to file the financing statement –§§ 9‐301 – 9‐307

Location of the debtor rule Registered organizations Organizations Individuals Trusts

26

Authorization to file the financing statement – § 9‐509

Express authorization Automatic authorization Authentication of security agreement

Ratification of earlier filing Retroactive effect

27

Perfection: maintaining the financing statement

5‐year rule for most financing statements – § 9‐515 6‐month window Fixture filings Manufactured homes

Amendments – § 9‐512 Change in name Change in collateral Terminations

28

Possession – § 9‐313

Applies only to tangible collateral Through agent Bailee Not effective unless bailee 

authenticates record that it has possession for ‘benefit of’ secured party

Bailee may not be too ‘closely connected’ to debtor

29

Control – § 9‐314(a)

Deposit accounts – § 9‐104 Investment property – §§ 8‐106 + 9‐106 Electronic chattel paper – § 9‐105 Letter‐of‐credit rights – § 9‐107

30

Compliance with other laws – § 9‐311

Certificate of title Cars

File financing statement for dealers with respect to inventory (seller or lessor of cars)

File financing statement if car dealer not in the business of selling cars (as well as leasing, if leasing is what it does)

Airplanes FAA filing UCC still applies to non‐perfection issues Capetown Convention

Ships

31

Federal law filing? – § 9‐109(c)(1)

Copyright File in Copyright Office for registered 

copyright and under UCC for unregistered copyrights

Patents File under UCC

Trademarks File under UCC

32

Supporting obligations and underlying collateral – § 9‐308

Security interest automatically perfected when security interest is perfected in supported obligation or secured obligation

33

Proceeds – § 9‐315

Perfected if security interest in original collateral was perfected

May lose perfection after  20 days if certain requirements are not met

34

Agricultural liens

Regular method of perfection rules apply

35

Application of perfection rules to specific types of collateral

Equipment, inventory, promissory notes, chattel paper Financing statement or possession Possible superpriority for promissory 

notes and chattel paper Accounts receivable Financing statement only

36

Application of perfection rules to specific types of collateral

Deposit accounts (as original collateral) Control only

Securities accounts Financing statement or control Control superpriority

Partnerships and LLC interests Financing statement only If opt in to Article 8, then also 

possession or control Possible superpriority

37

Due diligence

Which names to search Where to search Which systems to search in On‐site inspections Review contracts for assignment issues

38

Post‐closing changes

Change of debtor’s name – § 9‐507(c) Change of debtor’s location – § 9‐

316(a)(2) New debtor – §§ 9‐325, 9‐326 + 9‐508 Transfer of collateral to different debtor 

– § 9‐507(a) Ordinary course transferees – §§ 9‐320 

+ 9‐321 Conversion statutes  Article 9 revisions

39

UCC Secured Transactions: Avoiding Pitfalls in Perfecting Security Interests

Steve [email protected]

UCC Article 9