Why All the Fuss: Recent Litigation Over Security Agreements


This article looks at three recent cases from Illinois bankruptcy courts in which the effectiveness and enforceability of security agreements have been challenged.

In the Duckworth case, a chapter 7 trustee and another interested party challenged the sufficiency of an agreement which did not identify the date or amount of the secured debt, as well as a dragnet clause.

In Westermeyer, a trustee contended that a vehicle title application was insufficient to serve as a security agreement under the requirements of the Uniform Commercial Code.

In Miller, the debtors challenged the perfection of a security interest on the grounds that the use of a non-legal name in a financing statement rendered it insufficient.

The courts in each of these cases found in favor of the lienholders with regard to the validity of their agreements. But as some cases remain on appeal and future legal challenges may recur, parties potentially affected by this trend may want to review their security agreements.

LOADING PDF: If there are any problems, click here to download the file.

Written by:

Published In:

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Jeana Reinbold | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.