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33 Cards in this Set
- Front
- Back
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THROUGHOUT THIS CARD SET, 'C' REFERS TO A SECURED CREDITOR.
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C = SECURED CREDITOR
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What does UCC Art. 9 apply to?
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Consensual security interest in personality and fixtures.
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When the collateral is real property, what law to apply?
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Apply law of mtgs.
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What types of liens are not subject to Art. 9?
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Statutory and mechanics liens, because these interests are not consensual.
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Can collateral be both tangible and intangible?
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Yes.
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Identify different forms of tangible collateral.
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Consumer goods; Equipment; Inventory; Farm products; Fixtures
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Identify different forms of intangible collateral.
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Patents; TM's; Copyrights; Stocks; Bonds; Mutual Funds; Proceeds from collateral accounts; Promissory notes; Drafts
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How is an enforceable security interest created?
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Through the process of ATTACHMENT.
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How does attachment work?
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Attachement requires VCR. 1. Value - Creditor must give debtor something of value; 2. Contract - If the creditor is not in possession of the collateral, there must be a record of the agreement, authenticated (signed) by the debtor, which reasonably id's the collateral; No contract needed if creditor already has the collateral. 3. Right - Debtor must have a right in the collateral.
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After Acquired Collateral Clause: What is it? Is it enforceable?
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K provision that creditor will have a security interest in collateral whether owned now or later acquired. C is called the After Acquired Collateral Financier (AACF) ENFORCEABLE
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Once C has an attached security interest, how does C put the world on notice of its interest in the collateral?
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Through PERFECTION
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How does C perfect its security interest?
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3 Ways 1. C takes actual possession of the collateral; 2. Automatic perfection when C is a purchase money security interest holder (PMSI); 3. File notice (may be in the form of UCC-1 Financing Statement) of the security interest in the public records.
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If C perfects its interest by filing notice (financing statement) in the public records, what must the notice contain?
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ONLY: 1. D's name & address 2. C's name & address 3. Description of the collateral - Generic descrpt. ok ('all D's assets')
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Where to file the financing statement?
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With the Secretary of State (State Corp. Comm. in VA) where D is located.
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Where is D 'located' for purposes of filing the financing statement?
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D is Indiv - State of principal residence; D is Registered Org. - State of organization
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One exception to where C files the financing statement.
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Where the collateral is timber, minerals or fixtures, file in the county where Blackacre is located.
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How do debts get paid with respect to their priority?
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Each debt must be fully satisfied before a subordinate debt can get paid.
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PRIORITY FIGHT ATTACHED UNPERFECTED CREDITOR (AUC) vs. THE WORLD
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1. AUC's interest enforceable against D; 2. Earlier AUC defeats later AUC; 3. AUC defeats any General Unsecured Creditor (GUC); 4. AUC loses to Perfected Attached Creditor (PAC); 5. AUC loses to any buyer (in ordinary course or not).
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PRIORITY FIGHT PAC vs. THE WORLD
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PAC defeats all, except: 1. Earlier PAC; 2. Certain PMSI's; 3. Buyer in ordinary Course (BIOC)
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PRIORITY FIGHT PAC vs. PAC
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First PAC to perfect wins!
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PRIORITY FIGHT PMSI vs. AACF who has perfected & attached the collateral (The collateral is equipment)
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WHEN THE COLLATERAL IS EQUIPMENT: For a PMSI to defeat the AACF who has perfected & attached the collateral>>>PMSI must file properly w/in 20 days after D takes possession of the items that were purchased
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PRIORITY FIGHT PMSI vs. AAFC who has perfected & attached the collateral (The collateral is inventory)
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WHEN THE COLLATERAL IS INVENTORY: For a PMSI to defeat the AACF who has perfected & attached the collateral>>>PMSI must notify the AACF and file properly BEFORE D takes possession of the items purchased.
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PRIORITY FIGHT BIOC vs. THE WORLD
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BIOC defeats EVERYONE!
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GENERAL RANKING OF PRIORITY FIGHT WINNERS!!! THE RESULTS ARE IN!!!
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Buyer in the Ordinary Course BEATS Perfected Attached Creditor BEATS Lien Creditor BEATS Non-Ordinary Course Buyer BEATS Attached Unperfected Creditor BEATS General Unsecured Creditor
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What rights does C have when D defaults?
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1. Self-Help Reposession 2. Repossession by Judicial Action (Distress Warrant) 3. Strict Foreclosure 4. Sale 5. Deficiency Judgment
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Self-Help Repossession (on D's default)
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1. OK so long as c d/n breach the peace (take actions likely to cause violence); 2. Repossession made over any protest by D, however mild, is also a breach of the peace; 3. C cannot impersonate the law - it's constructive force; 4. Civil & criminal penalities for C's misconduct; 5. If collateral in D's home, C c/n go in & take w/o D's voluntary & contemporaneous consent; 6. S can take collateral that it not in D's home, so long as D d/n object.
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Repossession by Judicial Action (on D's default)
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1. This is the action for a distress warrant that can be brought to the GDC with no monetary cap; 2. C gets a writ from judge ordering sheriff to seize the collateral & deliver it to C.
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Strict Foreclosure (on D's default)
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1. Happens when C retains the collateral in full satisfaction of the debt; 2. S must send written notice proposing strict foreclosure to: >>>Collateral is consumer goods? Then notice to D & secondary obligors; >>>Collateral not consumer goods? Then notice to D & other C's who have told the foreclosing C of their interest, perfected creditors & secondary obligors. (They have 20 days to object) 3. Strict foreclosure not available to C if D has already paid 60% of the loan (non-PMSI) or 60% of the cash price (PMSI). C repos the collateral and then has 90 days to sell it. If C d/n sell w/in 90 days of repo, D sues C for conversion.
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Sale (on D's default)
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C sells the collateral and applies proceeds to the balance of the debt. C chooses to have a public or private sale.
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Requirements for Both Public & Private Sales (on D's default)
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1. Every aspect of the sale must be commercially reasonable. 2. 10 days advanced notice is reasonable in a non-consumer transaction. Consumer transactions just need a commercially reasonable time frame. 3. Reasonable notice sent prior to sale: Collateral is Consumer Goods: *Send notice to D & secondary obligors *notice must contain how deficiency is calculated & how D can redeem. Collateral is not Consumer Goods: *Notice sent to D, perfected creditors, secondary obligors, and all secured parties who have told C of their security interest.
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Can C buy at both the private and public sale?
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No. C can only buy at the public sale. In the private sale, too much opportunity for self-dealing.
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Deficiency Judgment (on D's default)
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If the sale falls short, and C d/n get all its money, C can go after D for the deficiency. If insider buys at sale at a crazy low price, that crazy low sale price is not used to calculate the deficiency - the price an independent 3rd party would have paid is used.
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D's Right to Redemption (after default)
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Agreement With Acceleration Clause: D redeems by paying off the entire debt + interest + expenses Agreement With No Acceleration Clause: D redeems by paying the missed payments + interest + C's reasonable expenses NO RIGHT TO REDEEM AFTER: 1. C has sold the collateral or 2. C has completed a strict foreclosure
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