1. 1 Secured Transactions Assignment 22 Maintaining Perfection Through Lapse and Bankruptcy

2. 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. 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. 4 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

5. 5 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

6. 6 The Lapse Problem RE recording systemUCC filing system

7. 7 The Lapse Problem RE recording system Adds documents, never removes documents UCC filing system

8. 8 The Lapse Problem RE recording system Adds documents, never removes documents 1. Mortgage UCC filing system

9. 9 The Lapse Problem RE recording system Adds documents, never removes documents 1. Mortgage 2. Satisfaction of mortgage UCC filing system

10. 10 The Lapse Problem RE recording system Adds documents, never removes documents 1. Mortgage 2. Satisfaction of mortgage UCC filing system May physically destroy documents after six years

11. 11 The Lapse Problem RE recording system Adds documents, never removes documents 1. Mortgage 2. Satisfaction of mortgage UCC filing system May physically destroy documents after six years 1. Financing statement

12. 12 The Lapse Problem RE recording system Adds documents, never removes documents 1. Mortgage 2. Satisfaction of mortgage UCC filing system May physically destroy documents after six years 1. Financing statement 2. Termination statement

13. 13 The Lapse Problem RE recording system Adds documents, never removes documents 1. Mortgage 2. Satisfaction of mortgage UCC filing system May physically destroy documents after six years 1. Financing statement 2. Termination statement Automatic termination at five years

14. 14 The Lapse Problem RE recording system Adds documents, never removes documents 1. Mortgage 2. Satisfaction of mortgage UCC filing system May physically destroy documents after six years 1. Financing statement 2. Termination statement Automatic termination at five years, so: 3. Continuation statement (at approximately five year intervals)

15. 15 Basic Concepts Temporary (automatic) perfection:

16. 16 Basic Concepts Temporary (automatic) perfection: General rule: Perfection by possession “continues only while the secured party retains possession.” §9-313(d)

17. 17 Basic Concepts Temporary (automatic) perfection: General rule: Perfection by possession “continues only while the secured party retains possession.” §9-313(d) Exception: Secured party who “makes goods available” for “ultimate sale” remains perfected for 20 days. §9-312(f).

18. 18 Basic Concepts Temporary (automatic) perfection: General rule: Perfection by possession “continues only while the secured party retains possession.” §9-313(d) Exception: Secured party who “makes goods available” for “ultimate sale” remains perfected for 20 days. §9-312(f). Searcher on goods has three tasks:

19. 19 Basic Concepts Temporary (automatic) perfection: General rule: Perfection by possession “continues only while the secured party retains possession.” §9-313(d) Exception: Secured party who “makes goods available” for “ultimate sale” remains perfected for 20 days. §9-312(f). Searcher on goods has three tasks: 1.Search filings 2.Examine goods for possession

20. 20 Basic Concepts Temporary (automatic) perfection: General rule: Perfection by possession “continues only while the secured party retains possession.” §9-313(d) Exception: Secured party who “makes goods available” for “ultimate sale” remains perfected for 20 days. §9-312(f). Searcher on goods has three tasks: 1.Search filings 2.Examine goods for possession 3.Determine if goods were possessed in previous 20 days

21. 21 Basic Concepts Temporary perfection/bankruptcy: Schwinn Cycling case

22. 22 Basic Concepts Bailee perfected by possession Temporary perfection/bankruptcy: Schwinn Cycling case

23. 23 Basic Concepts Bailee surrenders possession Bailee perfected by possession Temporary perfection/bankruptcy: Schwinn Cycling case

24. 24 Basic Concepts 20 days Bailee surrenders possession Deadline to perfect Bailee perfected by possession Temporary perfection/bankruptcy: Schwinn Cycling case §9-312(f) A perfected security interest in a negotiable document or goods in the possession of a bailee... remains perfected for 20 days without filing if the secured party makes available to the debtor the goods or documents representing the goods for the purpose of (1) ultimate sale or exchange; or (2)... otherwise dealing with them... preliminary to their sale or exchange.

25. 25 Basic Concepts §9-312(f) A perfected security interest in a negotiable document or goods in the possession of a bailee... remains perfected for 20 days without filing if the secured party makes available to the debtor the goods or documents representing the goods for the purpose of (1) ultimate sale or exchange; or (2)... otherwise dealing with them... preliminary to their sale or exchange. 20 days Bailee surrenders possession Deadline to perfect Temporary perfection/bankruptcy: Schwinn Cycling case Bailee perfected by possession Bankruptcy

26. 26 Basic Concepts §9-312(f) A perfected security interest in a negotiable document or goods in the possession of a bailee... remains perfected for 20 days without filing if the secured party makes available to the debtor the goods or documents representing the goods for the purpose of (1) ultimate sale or exchange; or (2)... otherwise dealing with them... preliminary to their sale or exchange. 20 days Bailee surrenders possession Deadline to perfect Temporary perfection/bankruptcy: Schwinn Cycling case Bailee perfected by possession Bankruptcy Now

27. 27 Basic Concepts §9-312(f) A perfected security interest in a negotiable document or goods in the possession of a bailee... remains perfected for 20 days without filing if the secured party makes available to the debtor the goods or documents representing the goods for the purpose of (1) ultimate sale or exchange; or (2)... otherwise dealing with them... preliminary to their sale or exchange. 20 days Bailee surrenders possession Deadline to perfect Temporary perfection/bankruptcy: Schwinn Cycling case Bailee perfected by possession Bankruptcy Now Bailee should have filed!

28. 28 Basic Concepts 9-210(b). [A] secured party... shall comply with a request within 14 days after receipt:

29. 29 Basic Concepts 9-210(b). [A] secured party... shall comply with a request within 14 days after receipt: (2) in the case of a request regarding a list of collateral or a request regarding a statement of account, by authenticating and sending to the debtor an approval or correction.

30. 30 Basic Concepts 9-210(b). [A] secured party... shall comply with a request within 14 days after receipt: (2) in the case of a request regarding a list of collateral or a request regarding a statement of account, by authenticating and sending to the debtor an approval or correction. 14 days Authenticated request with collateral list Authenticated approval or correction

31. 31 Basic Concepts 9-210(b). [A] secured party... shall comply with a request within 14 days after receipt: (2) in the case of a request regarding a list of collateral or a request regarding a statement of account, by authenticating and sending to the debtor an approval or correction. This is the only (non-contract) obligation for secured to furnish information 14 days Authenticated approval or correction Authenticated request with collateral list

32. 32 Basic Concepts 9-210(b). [A] secured party... shall comply with a request within 14 days after receipt: (2) in the case of a request regarding a list of collateral or a request regarding a statement of account, by authenticating and sending to the debtor an approval or correction. This is the only (non-contract) obligation for secured to furnish information Only the debtor may make a request. 14 days Authenticated approval or correction Authenticated request with collateral list

33. 33 Basic Concepts 9-210(b). [A] secured party... shall comply with a request within 14 days after receipt: (2) in the case of a request regarding a list of collateral or a request regarding a statement of account, by authenticating and sending to the debtor an approval or correction. This is the only (non-contract) obligation for secured to furnish information Only the debtor may make a request. The debtor can request on behalf of the searcher. 14 days Authenticated approval or correction Authenticated request with collateral list

34. 34 Problem 22.1, page 392 12/30/01 FS 7/7/06 CS a.Bank filed financing statement 12/30/01, continuation statement 7/7/06.

35. 35 Problem 22.1, page 392 12/30/01 FS 7/7/06 CS a.Bank filed financing statement 12/30/01, continuation statement 7/7/06. Was it timely?

36. 36 Problem 22.1, page 392 12/30/01 FS 7/7/06 CS 5 years 6 mo. 12/30/06 a.Bank filed financing statement 12/30/01, continuation statement 7/7/06. Was it timely? Yes, in last six months, §9-515(d).

37. 37 Problem 22.1, page 392 12/30/01 FS 7/7/06 CS 5 years 6 mo. 12/30/06 3/22/10 a.Bank filed financing statement 12/30/01, continuation statement 7/7/06. Was it timely? Yes, in last six months, §9-515(d). Today

38. 38 Problem 22.1, page 392 12/30/01 FS 7/7/06 CS 5 years 6 mo. 12/30/06 3/22/10 a.Bank filed financing statement 12/30/01, continuation statement 7/7/06. Was it timely? Yes, in last six months, §9-515(d). b.When is the next continuation statement due? Today

39. 39 Problem 22.1, page 392 12/30/01 FS 7/7/06 CS 5 years 6 mo. 12/30/0612/30/11 6/30/11 5 years 3/22/10 a.Bank filed financing statement 12/30/01, continuation statement 7/7/06. Was it timely? Yes, in last six months, §9-515(d). b.When is the next continuation statement due? 6/30/11 to 12/30/11, §9-515(d)

40. 40 Problem 22.1, page 392 12/30/01 FS 7/7/06 CS 5 years 6 mo. 12/30/0612/30/11 6/30/11 5 years 3/22/10 a.Bank filed financing statement 12/30/01, continuation statement 7/7/06. Was it timely? Yes, in last six months, §9-515(d). b.When is the next continuation statement due? 6/30/11 to 12/30/11, §9-515(d) c.Does a 3/29/10 bankruptcy change your advice?  Bky

41. 41 Problem 22.1, page 392 c. Does bankruptcy change your advice (to file a continuation statement between 6/30/11 and 12/30/11)?

42. 42 Problem 22.1, page 392 c. Does bankruptcy change your advice (to file a continuation statement between 6/30/11 and 12/30/11)? §362(a)(4). [A] petition.. operates as a stay.. of.. any act to create, perfect or enforce any lien against property of the estate.

43. 43 Problem 22.1, page 392 c. Does bankruptcy change your advice (to file a continuation statement between 6/30/11 and 12/30/11)? §362(a)(4). [A] petition.. operates as a stay.. of.. any act to create, perfect or enforce any lien against property of the estate. §362(b)(3). The filing of a petition... does not operate as a stay... of any act to perfect, or to maintain or continue the perfection... to the extent that the trustee’s rights... are subject to such perfection under section 546(b)...

44. 44 Problem 22.1, page 392 c. Does bankruptcy change your advice (to file a continuation statement between 6/30/11 and 12/30/11)? §362(a)(4). [A] petition.. operates as a stay.. of.. any act to create, perfect or enforce any lien against property of the estate. §362(b)(3). The filing of a petition... does not operate as a stay... of any act to perfect, or to maintain or continue the perfection... to the extent that the trustee’s rights... are subject to such perfection under section 546(b)... §546(b)(1)(B). The rights... of a trustee... are subject to any generally applicable law that... provides for the... continuation of perfection of an interest in property to be effective against an entity that acquires rights... before the date on which action is taken to effect such... continuation.

45. 45 Problem 22.1, page 392 c. Does bankruptcy change your advice (to file a continuation statement between 6/30/11 and 12/30/11)? No §362(a)(4). [A] petition.. operates as a stay.. of.. any act to create, perfect or enforce any lien against property of the estate. §362(b)(3). The filing of a petition... does not operate as a stay... of any act to perfect, or to maintain or continue the perfection... to the extent that the trustee’s rights... are subject to such perfection under section 546(b)... §546(b)(1)(B). The rights... of a trustee... are subject to any generally applicable law that... provides for the... continuation of perfection of an interest in property to be effective against an entity that acquires rights... before the date on which action is taken to effect such... continuation.

46. 46 Problem 22.2, page 392 FS 5 years No continuation statement was filed. Now Note due

47. 47 Problem 22.2, page 392 FS 5 years No continuation statement was filed. Now Note due Was continuation our job or the client’s job?

48. 48 Problem 22.2, page 392 FS 5 years No continuation statement was filed. Barnes v. Turner, 606 S.E. 2d 849 (Ga. 2004). Now Note due Was continuation our job or the client’s job?

49. 49 Problem 22.2, page 392 FS 5 years No continuation statement was filed. Barnes v. Turner, 606 S.E. 2d 849 (Ga. 2004). We do not, as the dissent contends, demand that the lawyer “ascertain the full extent of the client's 'objectives;’ only that the lawyer take reasonable, legal steps to fulfill the client's main, known objective -- to be paid for the business he sold....” Now Note due Was continuation our job or the client’s job?

50. 50 Problem 22.2, page 392 FS 5 years No continuation statement was filed. 1.Should we file a continuation statement now? Now Note due

51. 51 Problem 22.2, page 392 FS 5 years No continuation statement was filed. 1.Should we file a continuation statement now? No. §9- 510(c). Now Note due

52. 52 Problem 22.2, page 392 FS 5 years No continuation statement was filed. 1.Should we file a continuation statement now? No. §9- 510(c). 2.File a financing statement now? Now Note due

53. 53 Problem 22.2, page 392 FS 5 years No continuation statement was filed. 1.Should we file a continuation statement now? No. §9- 510(c). 2.File a financing statement now? Ask debtor’s permission? Now Note due

54. 54 Problem 22.2, page 392 FS 5 years No continuation statement was filed. 1.Should we file a continuation statement now? No. §9- 510(c). 2.File a financing statement now? Ask debtor’s permission? 9-509(b). By authenticating... a security agreement, a debtor... authorizes the filing of an initial financing statement... covering the collateral described....” Now Note due

55. 55 §1-106(1). [U]nless the context otherwise requires... words in the singular number include the plural... Problem 22.2, page 392 FS 5 years No continuation statement was filed. 1.Should we file a continuation statement now? No. §9- 510(c). 2.File a financing statement now? Ask debtor’s permission? 9-509(b). By authenticating... a security agreement, a debtor... authorizes the filing of an initial financing statement... covering the collateral described....” Now Note due

56. 56 Problem 22.3, page 392 Ryerson files 9 years Ryerson filed first and is supposed to have the first. Associates files Now Bky

57. 57 Problem 22.3, page 392 Ryerson files 9 years Ryerson filed first and is supposed to have the first. §9-322(a) Associates files Associates possesses Now Bky

58. 58 Problem 22.3, page 392 Ryerson files 9 years Ryerson filed first and is supposed to have the first. §9-322(a) How could Associates possess a traveling circus? Associates files Associates possesses Now Bky

59. 59 Problem 22.3, page 392 Ryerson files 9 years Ryerson filed first and is supposed to have the first. §9-322(a) How could Associates possess a traveling circus? Example: Allied Van Lines had the circus in trucks and authenticated record saying they held for Associates? Associates files Associates possesses Now Bky

60. 60 Problem 22.3, page 392 Ryerson files 9 years Ryerson filed first and is supposed to have the first. §9-322(a) a. How could Associates possess a traveling circus? Example: Allied Van Lines had the circus in trucks and authenticated record saying they held for Associates? b. Parker right? Associates files Associates possesses Now Bky

61. 61 Problem 22.3, page 392 Ryerson files 9 years Ryerson filed first and is supposed to have the first. §9-322(a) a. How could Associates possess a traveling circus? Example: Allied Van Lines had the circus in trucks and authenticated record saying they held for Associates? b. Parker right? §9-308(c). “A security interest... is perfected continuously if it is originally perfected by one method under this article and is later perfected by another method under this article, without an intermediate period when it was unperfected.” Associates files Associates possesses Now Bky

62. 62 Problem 22.3, page 392 Ryerson files 9 years Ryerson filed first and is supposed to have the first. §9-322(a) a. How could Associates possess a traveling circus? Example: Allied Van Lines had the circus in trucks and authenticated record saying they held for Associates? b. Parker right? §9-308(c). “A security interest... is perfected continuously if it is originally perfected by one method under this article and is later perfected by another method under this article, without an intermediate period when it was unperfected.” c. How will you do the closing next time? Evidence? Associates files Associates possesses Now Bky

63. 63 Problem 22.3, page 392 Ryerson files 9 years Ryerson filed first and is supposed to have the first. §9-322(a) a. How could Associates possess a traveling circus? Example: Allied Van Lines had the circus in trucks and authenticated record saying they held for Associates? b. Parker right? §9-308(c). “A security interest... is perfected continuously if it is originally perfected by one method under this article and is later perfected by another method under this article, without an intermediate period when it was unperfected.” c. How will you do the closing next time? Evidence? §9-339? Associates files Associates possesses Now Bky

64. 64 Problem 22.5, page 393 Firstbank: Security agreement: “12 fork lifts” Authorized financing statement: “Equipment” Fork lifts Drill presses Equipment

65. 65 Problem 22.5, page 393 Firstbank: Security agreement: “12 fork lifts” Authorized financing statement: “Equipment” Does Firstbank have a security interest in the drill presses? Fork lifts Drill presses Equipment

66. 66 Problem 22.5, page 393 Firstbank: Security agreement: “12 fork lifts” Authorized financing statement: “Equipment” Does Firstbank have a security interest in the drill presses? No. Fork lifts Drill presses Equipment

67. 67 Problem 22.5, page 393 Firstbank: Security agreement: “12 fork lifts” Authorized financing statement: “Equipment” Does Firstbank have a security interest in the drill presses? No. a. Does Firstbank have to give a release? Fork lifts Drill presses Equipment

68. 68 Problem 22.5, page 393 Firstbank: Security agreement: “12 fork lifts” Authorized financing statement: “Equipment” Does Firstbank have a security interest in the drill presses? No. a. Does Firstbank have to give a release? No. Authorized FS. Fork lifts Drill presses Equipment

69. 69 Problem 22.5, page 393 Firstbank: Security agreement: “12 fork lifts” Authorized financing statement: “Equipment” Does Firstbank have a security interest in the drill presses? No. a. Does Firstbank have to give a release? No. Authorized FS. b. Can Beaver borrow on the drill presses? Fork lifts Drill presses Equipment

70. 70 Problem 22.5, page 393 Firstbank: Security agreement: “12 fork lifts” Authorized financing statement: “Equipment” Does Firstbank have a security interest in the drill presses? No. a. Does Firstbank have to give a release? No. Authorized FS. b. Can Beaver borrow on the drill presses? Firstbank files “equipment” 2 nd bank files “drill presses,” SA, lends”

71. 71 Problem 22.5, page 393 Firstbank: Security agreement: “12 fork lifts” Authorized financing statement: “Equipment” Does Firstbank have a security interest in the drill presses? No. a. Does Firstbank have to give a release? No. Authorized FS. b. Can Beaver borrow on the drill presses? Firstbank files “equipment” 2 nd bank files “drill presses,” SA, lends” Firstbank gets SA in drill presses and lends

72. 72 Problem 22.5, page 393 §9-322(a)(1). Conflicting perfected security interests... rank according to priority in time of filing or perfection. Priority dates from the earlier of the time a filing covering the collateral is first made or the security interest... is first perfected.... Firstbank files “equipment” 2 nd bank files “drill presses,” SA, lends” Firstbank gets SA in drill presses and lends Who’s first? §9-322(a)(1)

73. 73 Problem 22.5, page 393 Firstbank files “equipment” 2 nd bank files “drill presses,” SA, lends” Who’s first? §9-322(a)(1) Will §9-210 help? Firstbank gets SA in drill presses and lends §9-322(a)(1). Conflicting perfected security interests... rank according to priority in time of filing or perfection. Priority dates from the earlier of the time a filing covering the collateral is first made or the security interest... is first perfected....

74. 74 Problem 22.5, page 393 Firstbank files “equipment” 2 nd bank files “drill presses,” SA, lends” Who’s first? §9-322(a)(1) Will §9-210 help? Firstbank “No SI” Firstbank gets SA in drill presses and lends §9-322(a)(1). Conflicting perfected security interests... rank according to priority in time of filing or perfection. Priority dates from the earlier of the time a filing covering the collateral is first made or the security interest... is first perfected....

75. 75 Problem 22.7, page 394 Would the Suarezs be better off under the UCC rule? Bill of sale Termination SuarezBuyer New Lender $600K Global $407KTermination $550K

76. 76 Problem 22.7, page 394 Would the Suarezs be better off under the UCC rule? UCC §9-513(c). [W]ithin 20 days after a secured party receives an authenticated demand... the secured party shall... send to the debtor a termination statement... if (1)... there is no obligation secured by the collateral... and no commitment to make an advance.... Bill of sale Termination SuarezBuyer New Lender $600K Global $407KTermination $550K

77. 77 Bill of sale Termination Problem 22.7, page 394 Would the Suarezs be better off under the UCC rule? UCC §9-513(c). [W]ithin 20 days after a secured party receives an authenticated demand... the secured party shall... send to the debtor a termination statement... if (1)... there is no obligation secured by the collateral... and no commitment to make an advance.... SuarezBuyer New Lender $600K Global $407KTermination $550K Termination Payment and demand 20 days

78. 78 Problem 22.7, page 394 Would the Suarezs be better off under the UCC rule? UCC §9-513(c). [W]ithin 20 days after a secured party receives an authenticated demand... the secured party shall... send to the debtor a termination statement... if (1)... there is no obligation secured by the collateral... and no commitment to make an advance.... SuarezBuyer New Lender $600K Global $407KTermination $550K Payment and termination Demand 20 days Bill of sale Termination

79. 79 Problem 22.7, page 394 9-509(d). A person may file an amendment... only if... (2) the amendment is a termination statement... the secured party... failed to file or send... as required by Section 9- 513(c), the debtor authorizes the filing, and the termination statement indicates that the debtor authorized it to be filed. SuarezBuyer New Lender $600K Global $407KTermination $550K Bill of sale Termination

80. 80 Problem 22.7, page 394 9-509(d). A person may file an amendment... only if... (2) the amendment is a termination statement... the secured party... failed to file or send... as required by Section 9- 513(c), the debtor authorizes the filing, and the termination statement indicates that the debtor authorized it to be filed. [Otherwise, it is ineffective. 9-510(a).] SuarezBuyer New Lender $600K Global $407KTermination $550K Bill of sale Termination

81. 81 Problem 22.7, page 394 9-509(d). A person may file an amendment... only if... (2) the amendment is a termination statement... the secured party... failed to file or send... as required by Section 9- 513(c), the debtor authorizes the filing, and the termination statement indicates that the debtor authorized it to be filed. [Otherwise, it is ineffective. 9-510(a).] If you are New Lender, is this termination statement acceptable? SuarezBuyer New Lender $600K Global $407KTermination $550K Bill of sale Termination