ucc article 9 update: searching and filing under...
TRANSCRIPT
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UCC Article 9 Update:
Searching and Filing Under New Amendments Lessons Learned Under the Recent Rules, Best Practices for Secured Lenders
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Presenting a live 90-minute webinar with interactive Q&A
Edwin E. Smith, Partner, Morgan Lewis & Bockius LLP, New York
Steven O. Weise, Partner, Proskauer Rose, Los Angeles
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Commercial Law Developments – 2014 | 48902716.1 4
UCC Article 9 Update: Searching and Filing Under New Amendments
Edwin E. Smith Morgan Lewis Bockius LLP
Steve Weise Proskauer Rose LLP
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When to use a financing statement
In re Gem Refrigerator Co.; Seitz v. Republic First Bank, 512 BR 194 (Bankr. ED Pa. 2014) –Importance of determining whether an account is a securities account or a deposit account, because a security interest in a securities account can be perfected with a financing statement and a security interest in a deposit account cannot
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When to use a financing statement
In re HW Partners, LLC, No. 11–03366–JAR11, 2013 WL 4874172 (Bankr. E.D. Wash. Sept. 12, 2013) – Recording assignment of mortgage does not perfect security interest in notes secured by mortgage
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Authority to file
In re Motors Liquidation Co., 755 F.3d 78 (2d Cir. 2014); 2014 WL 5305937 (Del. 2014); _ F. 3d _ (2d Cir. 2015) – A termination statement is authorized by the secured party if the secured party of record reviewed and knowingly approved the termination statement for filing, regardless of whether the secured party subjectively intended or understood the effect of the filing
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Authority to file
In re the Adoni Group, _ B.R. _ (Bankr. SDNY May 4, 2015) – Ratification of filing that was not authorized at time of filing
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Where to file
Copyright
o Aerocon Engineering, Inc., v. Silicon Valley Bank (In re World Aux. Power Co.), 303 F.3d 1120 (9th Cir. 2002) – File in Copyright Office for registered copyright and under UCC for unregistered copyrights
Patents
o Moldo v. Matsco, Inc. (In re Cybernetic Services, Inc.), 252 F.3d 1039 (9th Cir. 2001) – File under UCC
o Precautionary PTO filing (to beat buyers)?
Trademarks
o Trimarchi v. Together Development Corp., 255 B.R. 606 (D. Mass. 2000) – File under UCC
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Where to file
Dayka & Hackett, LLC v. Del Monte Fresh Produce N.A., Inc., 269 P.3d 709, 76 UCC Rep.2d 637 (Ariz. Ct. App. 2010) – When to follow the rules of a non-U.S. filing system under UCC § 9-307(c)
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Where to file
Clinton v. Adams, 2014 WL 6896021 (C.D. Cal. 2014) – Security interest was unperfected because the law firm filed a financing statement in California, where the infringement claim was prosecuted, rather than in Florida, where the debtor is located
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Where to file
Sturtz Machinery, Inc. v. Dove’s Industries, Inc., 83 U.C.C. Rep.Serv. 2d 425 (N.D. Ohio 2014) – Lender perfected its security interest in the debtor’s fixtures by filing a financing statement in Pennsylvania, where the debtor was located, even though the fixtures were located in Virginia
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Searching
In re: Spearing Tool and Manufacturing Co., Inc. 2005 U.S. App. LEXIS 11808 (6th Cir. 2005) – Location of filing for Federal tax lien and name used by IRS on notice
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Searching
• Look for descriptions of collateral that can turn into other collateral as ‘proceeds’
• Generally follow priority of original collateral
• Special rules for non-temporal priority (§ 9-322(c))
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Debtor name
In re Patriot Electric and Mechanical, Inc., 2014 WL 1761928 (Bankr. D. Md. 2014) – Were the filed financing statement and continuation statements that listed the debtor’s original name – “Patriot Electric, Inc.” – but not the name the debtor adopted after the financing statement was filed – “Patriot Electric and Mechanical, Inc.” effective?
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Debtor name
In re C.W. Mining Co., 488 B.R. 715 (D. Utah 2013) --Financing statement with improper punctuation of debtor’s name was insufficient to perfect security interest
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Debtor name
Debtor name Mistaken financing statement
C. W. Mining Company CW Mining Company
EDM Corporation EDM Corporation d/b/a EDM
Equipment
Michael Erwin Mike Erwin
Terrance Joseph Kinderknecht Terry J. Kinderknecht
Rodger House Roger House
Michael Barry Mike Barry
Andrew Fuell Andrew Fuel
Silver Dollar, LLC Silver Dollar Stores, LLC
Jim Ross Tires, Inc. Jim Ross Tire Inc.
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Description of collateral
Clinton v. Adams, 2014 WL 6896021 (C.D. Cal. 2014) – Reference to money due does not include underlying claim
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Description of collateral
In re Sterling United; Ring v. First Niagara Bank, N.A., 2014 Bankr. LEXIS 4238 (Bankr.W.D.N.Y. 2014) – Court evaluates whether a collateral description in a financing statement is seriously misleading under Article 9. Court concludes filings were good enough to put subsequent searchers on notice
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Description of collateral
• In re Nickeson, 2014 WL 6686524 (Bankr. D.S.D. 2014) – Collateral description did not cover the debtor’s stock in a closely held corporation, which is classified as investment property, not a general intangible
• See also Russell Road Food and Beverage, LLC v. Galam, 2014 WL 6746569 (9th Cir. 2014)
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Description of collateral
In re Estate of Wheeler, 2013 WL 3440953 (Colo. Ct. App. 2013) – Collateral description “all property now owned or hereafter acquired by [the tenant] which shall come in or be placed upon the Premises” reasonably identified secured collateral as all of tenant’s personal property at tenant’s jewelry store
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Description of collateral
In re Gene Express, Inc., 2013 WL 1787971 (Bankr. E.D.N.C. 2013) – Collateral description of “any personal property belonging to Tenant and left on the Premises” is “supergeneric” and not sufficient
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Description of collateral
In re Salander-O'Reilly Galleries, LLC, 506 B.R. 600 (Bankr. S.D.N.Y. 2014), rev’d, 2014 WL 7389901 (S.D.N.Y. 2014) – Description of collateral as goods “owned” by debtor did not include goods where the debtor was only a consignee
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Description of collateral
U.S. Commodity Futures Trading Commission v. U.S. Bank, 2013 WL 5944179 (N.D. Iowa 2013) – Meaning of the “granting” language in the guaranties depends on extrinsic evidence in light of the context of the dispute and determination left to the trier of fact
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Description of collateral
• Collins v. Angell, No. 3:12–CV–0589, 2013 WL 3243559 (N.D.N.Y. June 26, 2013) – Factual question about whether a security agreement and financing statement that identified collateralized cattle by name and ear tag number was effective with respect to cattle whose ear tag had either fallen off or did not match one of the listed numbers
• In re Baker, 511 B.R. 41 (Bankr. N.D.N.Y. 2013) – Describing cows by spots and ear tags
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Description of collateral
In re Cunningham, 489 B.R. 602 (Bankr. D. Kan. 2013) – Description of “the goods purchased on your Account” did not ID collateral
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Description of collateral
Johnson v. Binkley, No. 2 CA–CV 2012–0167, 2013 WL 5593287 (Ariz. Ct. App. Oct. 9, 2013) – Deed of trust granting a security interest in “Personal Property,” defined as “all equipment, fixtures, and other articles of personal property . . . attached to the Real Property,” was limited to fixtures
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Amendment
Monroe Bank & Trust v. Chie Contractors, Inc., 2013 WL 1629300 (Mich. Ct. App. 2013) – Financing statement amendment that purported to simultaneously amend and terminate the prior filing did not terminate
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Amendment
In re Residential Capital, LLC, 497 B.R. 403 (Bankr. S.D.N.Y. 2013 ) – Collateral agent for junior secured noteholders – not the debtor – executed releases of collateral and filed amendments identifying various categories of released collateral – the releases and amendments were authorized even if the collateral agent acted outside the scope the authority granted by the noteholders
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Amendment
In re Oak Rock Financial, LLC, _ B.R. _ (Bankr. EDNY March 19, m2015) – Assignee of financing statement has all of the rights of an assignor
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Amendment
In re Northern Beef Packers Ltd. Partnership Tax ID/EIN 26-2530200, 83 U.C.C. Rep. Serv. 2d 104 (Bankr. D.S.D. 2014) – Security interest became unperfected when the lessor amended its financing statement to “restate” the collateral to consist only of the equipment covered now or in the future by a lease or security agreement between it and the debtor
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Lapse
In re Highland Construction Management Services, LP, 2013 WL 1336918 (Bankr. E.D. Va. 2013) – Financing statement that lapses after the filing of a petition in bankruptcy wins as against a debtor-in-possession’s rights as a hypothetical lien creditor
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Lapse
In re Colony Beach and Tennis Club, Inc., 508 B.R. 468 (Bankr. M.D. Fla. 2014) – Effect of post-petition lapse