secured transactions assignment 18

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Secured TransactionsAssignment 18

Financing Statements: Other Information

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The Big Picture

Part One: The Creditor-Debtor Relationship

Part Two: The Creditor Third Party Relationship

Chapter 6-7: Perfection

Assignment 16: Filing Systems

Assignment 17: Financing Statements: The Debtor’s Name

Assignment 18: Financing Statements: Other Information

Chapter 8-9: Priority

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The Big Picture








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The Big Picture








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The Big PictureTheory of the filing system: First takers communicate their

interests to later takers

Problems:

1. They must be filing and searching in the same system

2. They must be filing and searching in the same name

3. Searcher may need more information

To weed out the false positives: “Is this my debtor?Is this my collateral?”

To make additional inquiry (of the secured party)

So financing statement should contain eight more pieces of information

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Problems:







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Problems:







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Problems:







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Problems:



3. Searcher may need more information. Is this filer ahead of me?



So financing statement

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Problems:



3. Searcher may need more information.

Is this my debtor? (False positives)

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Problems:





Is this my collateral?

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Problems:






How do I find the secured creditor to ask?

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Problems:






How do I find the secured creditor to ask?

So a financing statement should contain five more pieces of information

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What should be in a financing statement:

1. Name of the debtor

2. Name of the secured party

3. Indication of collateral

4. Mailing address of secured party

5. Mailing address of debtor

6. Individual or organization?

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What must be in a financing statement:1. To qualify for filing: §9-516(b)



3. Not an indication of collateral




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What must be in a financing statement:1. To qualify for filing: §9-516(b)



3. Not an indication of collateral




These three items need not be correct

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What must be in a filed financing statement:2. Against a reliance purchaser: §9-506(a)

1. Name of the debtor; not seriously misleading, §9-502(a), 9-506(c)

2. Name of the secured party; can’t seriously mislead but might give rise to an estoppel, §9-506 Comment 2

3. Indication of collateral; not seriously misleading

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The totality of information included must not be seriously misleading, §9-506(a).)

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4 - 6. The defective filer loses to purchasers who give value in reasonable reliance upon incorrect 9-516(b)(5) information. (Hardly anyone.)

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What must be in a filed financing statement:3. Against a bankruptcy trustee §9-506(a)


2. Name of the secured party must be present but need not be right, §9-506 Comment 2



4 - 6. The defective filer loses to no one.

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TerminologyInitial financing statement – UCC-1, shown in §9-521(a), text

at page 264

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at page 264

Amendments – form at §9-521(b)

Assignment: Transfers the secured party’s rights (optional)

Continuation statement: Makes the financing statement effective for five more years

Termination statement: Makes the financing statement ineffective.

Party Information change: Changes to names and addresses

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at page 264

Amendments – form at §9-521(b)

Assignment: Transfers the secured party’s rights (optional)

Continuation statement: Makes the financing statement effective for five more years

Termination statement: Makes the financing statement ineffective.

Party Information change: Changes to names and addresses

Financing statement – The initial financing statement plus all amendments. §9-102(a)(39)

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Problem 18.1, page 324

You have to file the financing statement now, but don’t know the debtor’s address

a. Leave the debtor’s address blank? Or fill in the address of the lot next door?

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Answer: the SOS will rightfully reject a blank filing, §9-516(b)(5)(C)(iii), but must accept an erroneous filing

b. You include the phony address and the SOS rejects. Are you perfected?

Answer: §9-516(d).

c. What if the SOS accepts?

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Answer: the SOS will rightfully reject a blank filing, §9-516(b)(5)(C)(iii), but must accept an erroneous filing

b. You include the phony address and the SOS rejects. Are you perfected?

Answer: §9-516(d).

c. What if the SOS accepts?

Answer: You are at least lien-perfected. §9-520(c).


We represent a trustee in bankruptcy

We have the rights of a lien creditor who levied at bankruptcy, Bankruptcy Code §544

UCC §9-317(a). A security interest is subordinate to the rights of a person that becomes a lien creditor before the earlier of the time:

(A) The security interest is perfected; or

(B) [A security agreement is entered into] and a financing statement is filed

Financing statement must be sufficient. §9-502

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Problem 18.2, page 324UCC-1 item Correct

informationInformation on the form

Authority OK?

Secured party address

123 Main St.Madison, WI

Blank 9-516 cmt 59-520 cmt 39-516 cmt 59-520 cmt 39-516 cmt 59-520 cmt 39-516 cmt 59-520 cmt 39-516 cmt 59-520 cmt 39-516 cmt 59-520 cmt 3

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Authority OK?



Blank 9-516 cmt 59-520 cmt 3

OK

9-516 cmt 59-520 cmt 39-516 cmt 59-520 cmt 39-516 cmt 59-520 cmt 39-516 cmt 59-520 cmt 39-516 cmt 59-520 cmt 3

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Authority OK?



Blank 9-516 cmt 59-520 cmt 3

OK

Indication of collateral

Case # 09-1694, CD CA.

Proceeds of any lawsuit

9-108(e), cmt 5 last ¶9-516 cmt 59-520 cmt 39-516 cmt 59-520 cmt 39-516 cmt 59-520 cmt 39-516 cmt 59-520 cmt 3

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Authority OK?



Blank 9-516 cmt 59-520 cmt 3

OK


Case # 09-1694, CD CA.


9-108(e), cmt 5 last ¶

Not OK

9-516 cmt 59-520 cmt 39-516 cmt 59-520 cmt 39-516 cmt 59-520 cmt 39-516 cmt 59-520 cmt 3

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Authority OK?



Blank 9-516 cmt 59-520 cmt 3

OK


Case # 09-1694, CD CA.


9-108(e), cmt 5 last ¶

OK?

Secured party name

Wardcorp, Inc.

Wills Furniture

9-503(c)9-506 cmt 29-516 cmt 59-520 cmt 39-516 cmt 59-520 cmt 39-516 cmt 59-520 cmt 3

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Authority OK?



Blank 9-516 cmt 59-520 cmt 3

OK


Case # 09-1694, CD CA.


9-108(e), cmt 5 last ¶

OK?

Secured party name

Wardcorp, Inc.

Wills Furniture

9-503(c)9-506 cmt 2

OK?

9-516 cmt 59-520 cmt 39-516 cmt 59-520 cmt 39-516 cmt 59-520 cmt 3

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Authority OK?



Blank 9-516 cmt 59-520 cmt 3

OK


Case # 09-1694, CD CA.


9-108(e), cmt 5 last ¶

OK?

Secured party name

Wardcorp, Inc.

Wills Furniture

9-503(c)9-506 cmt 2

OK?

Secured party name

Lynn M. LoPucki

Elizabeth Warren

9-506(a) and cmt 29-516 cmt 59-520 cmt 39-516 cmt 59-520 cmt 3

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Authority OK?



Blank 9-516 cmt 59-520 cmt 3

OK


Case # 09-1694, CD CA.


9-108(e), cmt 5 last ¶

OK?

Secured party name

Wardcorp, Inc.

Wills Furniture

9-503(c)9-506 cmt 2

OK?

Secured party name

Lynn M. LoPucki

Elizabeth Warren

9-506(a) and cmt 2

NotOK?

9-516 cmt 59-520 cmt 39-516 cmt 59-520 cmt 3

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Authority OK?



Blank 9-516 cmt 59-520 cmt 3

OK


Case # 09-1694, CD CA.


9-108(e), cmt 5 last ¶

OK?

Secured party name

Wardcorp, Inc.

Wills Furniture

9-503(c)9-506 cmt 2

OK?

Secured party name

Lynn M. LoPucki

Elizabeth Warren

9-506(a) and cmt 2

Not OK?


Ovens at 514 E Washington

Ovens at 621 State St.

9-5049-1089-516 cmt 59-520 cmt 3

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Authority OK?



Blank 9-516 cmt 59-520 cmt 3

OK


Case # 09-1694, CD CA.


9-108(e), cmt 5 last ¶

OK?

Secured party name

Wardcorp, Inc.

Wills Furniture

9-503(c)9-506 cmt 2

OK?

Secured party name

Lynn M. LoPucki

Elizabeth Warren

9-506(a) and cmt 2

Not OK?




9-5049-108

Not OK

9-516 cmt 59-520 cmt 3

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Authority OK?



Blank 9-516 cmt 59-520 cmt 3

OK


Case # 09-1694, CD CA.


9-108(e), cmt 5 last ¶

OK?

Secured party name

Wardcorp, Inc.

Wills Furniture

9-503(c)9-506 cmt 2

OK?

Secured party name

Lynn M. LoPucki

Elizabeth Warren

9-506(a) and cmt 2

Not OK?




9-5049-108

Not OK


Equipment Blank 9-108, 502 (a)(3), 504

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Authority OK?



Blank 9-516 cmt 59-520 cmt 3

OK


Case # 09-1694, CD CA.


9-108(e), cmt 5 last ¶

OK?

Secured party name

Wardcorp, Inc.

Wills Furniture

9-503(c)9-506 cmt 2

OK?

Secured party name

Lynn M. LoPucki

Elizabeth Warren

9-506(a) and cmt 2

Not OK?




9-5049-108

Not OK


Equipment Blank 9-108, 502 (a)(3), 504

Not OK

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Problem 18.3, page 325Smith has $26K judgment; sees these filed financing statements:

Financingstatement

Financingstatement

Financingstatement

Trimblestore

Financingstatement

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Security agreement?

Smith has $26K judgment; sees these filed financing statements:

a. If Glacier Bank’s Security Agreement covers the Trimble Store and one of the financing statements was intended to, could Glacier be perfected?

Financingstatement

Financingstatement

Financingstatement

Trimblestore

Financingstatement

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Security agreement?


a. If Glacier Bank’s Security Agreement covers the Trimble Store and one of the financing statements was intended to, could Glacier be perfected? Teel arguably? Pickle no.

Financingstatement

Financingstatement

Financingstatement

Trimblestore

Financingstatement

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b. What should we do?


Financingstatement

Financingstatement

Financingstatement

Trimblestore

Financingstatement

Security agreement?

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Security agreement?


b. What should we do? Call Glacier and ask?


Financingstatement

Financingstatement

Financingstatement

Trimblestore

Financingstatement

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We represent Glacier Bank. We were supposed to have the Trimble store, but Trimble is not in our SA description.


Financingstatement

Financingstatement

Financingstatement

Trimblestore

Financingstatement

Security agreement

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a. Smith’s lawyer calls. What should we say?


Financingstatement

Financingstatement

Financingstatement

Trimblestore

Financingstatement

Security agreement

Glacier Smith

Us Lawyer

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Glacier Smith

Us Lawyer



a. Smith’s lawyer calls. What should we say?

b. Different if call is from another bank? §9-210.


Financingstatement

Financingstatement

Financingstatement

Trimblestore

Financingstatement

Security agreement

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Security agreement?


b. What should we do? Call Glacier and ask? No. Levy or fold?


Financingstatement

Financingstatement

Financingstatement

Trimblestore

Financingstatement

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Problem 18.5, page 325Walter’s Department Store wants to file financing statements

on thousands of consumer debtor customers.

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a. Does Walter’s need permission?

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§9-509(a). A person may file an initial financing statement . . . only if the debtor authorizes the filing in an authenticated record or pursuant to (b) or (c).

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(b) By authenticating . . . a security agreement , a debtor . . . authorizes the filing of an initial financing statement.

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b. What should Walter’s use as a description of collateral? Problem 9.2.

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Same as in the security agreement. §9-509(b), §9-625(e)

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on thousands of consumer debtor customers





Same as in the security agreement. §9-509(b), §9-625(e) What if the customer’s receipt is the security agreement?

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on thousands of consumer debtor customers





Same as in the security agreement. §9-509(b), §9-625(e) What if the customer’s receipt is the security agreement?

c. What practical problems do you foresee?

secured transactions assignment 18

Documents

filing system

financing statements

big picturetheory

big picturepart

additional inquiry

pieces of information

later takersproblems

false positives