News & Analysis as of

Secured Lenders – Stay on Top of the Law or Proceed at Your Own Risk

For years, the typical post-default strategy of secured lenders has been to foreclose the collateral through the power-of-sale contained in the deed of trust, credit the foreclosure proceeds to the outstanding loan balance,...more

Financial Entity Update: The CFTC’s Proposed Margin Rules for Uncleared Swaps – Goofy Haircut

Under the Margin Rules, swap dealers and major swap participants that do not have a prudential regulator (Covered Swap Entities, or CSEs) would be required to collect and post initial margin for uncleared swaps with financial...more

When a Driver’s License Is More Than a Bad Picture: Is Your UCC Financing Statement Still Effective?

UCC Financing Statements Must Contain the Debtor’s Correct Name - “[A] financing statement is sufficient only if it [among other things] . . . provides the name of the debtor. “ N.C. Gen. Stat. § 25-9-502(a)(1) (emphasis...more

New York’s Revised UCC – Winds of Change (Part 2 of 2)

In this second and last part of this series (click here for Part 1) we discuss the changes to Article 9 (Secured Transactions) of the Uniform Commercial Code of the State of New York (the “NYUCC”), as recently amended by...more

Lender Beware: The Pitfalls of Narrowly Defined Secured Obligations

A recent decision by the United States Court of Appeals for the Seventh Circuit underscores the substantial risks secured lenders take when they narrowly define the obligations intended to be secured by their borrowers’...more

It’s a Bird, It’s a Plane, It’s . . . Super Priority! A Brief Primer on Purchase Money Security Interests

What is a “Purchase Money Security Interest”? A “purchase-money security interest” (or “PMSI”) is a security interest securing a “purchase-money obligation”, or an obligation incurred by a debtor to buy collateral...more

Security Interests in Intellectual Property

As collateral for a loan, lenders are accustomed to obtaining a security interest in the property of the borrower. Such property usually includes tangible assets of the borrower such as real estate, machinery and other...more

Overview and Analysis of Select Provisions of the ABI Chapter 11 Reform Commission Final Report and Recommendations

In December, the American Bankruptcy Institute issued its Final Report and Recommendations of the Commission to Study the Reform of Chapter 11. The Report is almost 400 pages long and contains more than 200 recommendations....more

A Cautionary Tale – The Need for Bank Oversight on Collateral Releases

Beware!! The story brought to us today courtesy of the Second Circuit Court of Appeals (In re: Motor Liquidation Co., 13-2187) is one that should strike fear into the hearts of all bankers and lawyers. It is a cautionary tale...more

UCC Collateral Description: More May Not Be Better

Ring v. First Niagara Bank, N.A. (In re Sterling United, Inc.), 519 B.R. 586 (Bankr. W.D.N.Y. 2014) – A chapter 7 trustee sought to recover as preferences payments made by the debtor to a lender and proceeds of...more

Views from the Footprint - Banking, Collateral, Default and Foreclosure Question

In this issue of Community Banking Excellence, we pose a question to Spilman’s banking law professionals throughout the firm’s geographical footprint, focusing on Virginia, Pennsylvania, North Carolina and West Virginia. The...more

Security Interests in Intellectual Property and Related Issues in Bankruptcy

Intellectual property (“IP”) can act as collateral to be pledged to secure an extension of credit. For example, a company that borrows money from a bank can pledge its patents as collateral for the loan. The bank (referred...more

Valuing a Secured Creditors Collateral: A Time Frame

Section 506(a)(1) of the Bankruptcy Code provides common-sense instruction that the allowed amount of a secured claim is equal to the value of the collateral securing the claim and that a claim is unsecured to the extent the...more

Fees for Recording IP Security Agreements with the USPTO and USCO

In financing transactions, such as loans or securitizations, lenders will typically take a security interest in the borrower's assets pledged as collateral, including any United States intellectual property ("US IP") assets,...more

Secured Lender Protection Limited When Bitcoin is Collateral

On June 17, 2014, the U.S. Bankruptcy Court in Dallas granted recognition under chapter 15 of the Bankruptcy Code of the bankruptcy proceeding in Japan of failed bitcoin exchange, Mt Gox. Mt. Gox shut down after claiming to...more

Equity Begets Flexibility: Valuing a Secured Creditor’s Claim in Bankruptcy and Allocating Post-Petition Interest

The First Circuit Court of Appeals in In re SW Boston Hotel Venture, LLC, 2014 U.S. App. LEXIS 6768 (1st Cir. Apr. 11, 2014) recently ruled on a number of issues critical to valuing a secured claim in bankruptcy....more

Drafting Tips: Securities Lending Authorization Agreements

Securities lending is a type of transaction in which an entity ("Lender") with a large portfolio of securities (e.g., a pension fund or endowment) lends its securities to a borrower ("Borrower") in exchange for collateral...more

Margin Call: Advanced Topics and Practice Points

In previous installments, we covered the basics of the margin regulations. In our final two installments, we’ll cover a few practice points and explore some of the more complex margin issues (particularly under Regulation U),...more

A Primer On UCC Article 9 Sales

Article 9 of the Uniform Commercial Code sets forth a statutory scheme for both creating and enforcing security interests in personal property. Pursuant to Article 9, a lender seeking to collateralize an advance on the...more

Lenders' risk: Who really owns the collateral?

Unlike real estate transactions where a lender can obtain title insurance, secured lenders are often relying upon the representations and warranties in their loan agreement and the borrower’s audited financial statements, if...more

Securing Public Deposits Under Pennsylvania's Act 72

A governmental entity in Pennsylvania may deposit its moneys in a financial institution only if the financial institution pledges collateral for the deposit to the extent the deposit exceeds the FDIC insurance limits. This...more

Intent-to-Use Trademark Applications and Security Agreements

In financing transactions, such as loans or securitizations, the lender who provides the financing will typically take a security interest over the assets pledged as collateral against the borrower's compliance with its...more

"Loss Payee" v. "Lender Loss Payee": How the Difference of One Word Can Prevent a Secured Lender's Recovery on Insurance Proceeds

As a secured lender, you take a security interest in your borrower’s inventory and/or equipment and then perfect under applicable law. To further protect the value of the collateral supporting your loan, you confirm your...more

IFLR Project Finance Report 2014: US

Section 1 – Collateral/security 1.1 What types of collateral/security are available? It is customary in a project financing of a project or portfolio of projects located within the US (a US project financing) that, on...more

SEC Amends Rule 5b-3 and Fund Registration Forms to Eliminate References to NRSRO Ratings

The U.S. Securities and Exchange Commission (SEC) recently adopted final amendments to certain rules and forms under the Investment Company Act of 1940 (1940 Act) and the Securities Act of 1933 (1933 Act) to implement a...more

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