Uniform Commercial Code

News & Analysis as of

Considerations For Lenders in Workouts & Loan Restructurings

Despite the improvement in the economy since the advent of the “Great Recession,” many businesses nevertheless continue to struggle. Accordingly, lenders are well advised to stay up to date on  “best practices” when facing a...more

EU Customs Practice Group - January 2015

In This Issue: - EU CUSTOMS POLICY: ..UCC Developments ..EP hearing on customs sanctions - TARIFFS: ..FTA update - CLASSIFICATION: ..Classification Regulations ..Nomenclature Committee...more

Indiana Court of Appeals Reverses “E-Mortgage” Decision

The Indiana Court of Appeals reversed and remanded for further proceedings a trial court’s grant of partial summary judgment and held that because the plaintiff did not show that it controlled the electronic mortgage note...more

The GM Engine that Couldn’t: $1.5B Nail in JPMorgan’s Coffin

In our recent post, “Review Twice, File Once, Review Again; UCC-3 Termination Intent Irrelevant,”we described how the Delaware Supreme Court set forth how a secured party’s lien can be terminated without the requisite intent,...more

Second Circuit Rules Unintended UCC Termination Statement Was Authorized

When terminating a financing statement, it is necessary to be certain that other financing statements are not unintentionally released, according to an opinion last week of the Second Circuit Court of Appeals. The effect of...more

Erroneous UCC-3 Termination Leads to Disastrous Consequences

In a recent decision, a U.S. Court of Appeals held that the filing of a UCC-3 termination statement in a relatively simple payoff transaction between General Motors and a lender was still considered "authorized," despite the...more

Courts Address the Level of Security Banks Must Provide to Business Accounts

Big or small, all bank accounts are susceptible to hijacking and fraudulent wire transfers. Banks ordinarily bear the risk of loss for unauthorized wire transfers. Two independent frameworks exist to govern these transfers:...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

For the Canadian Cross-Border Finance Lawyer or Lender, A UCC Financing Statement Hypothetical with FAQs

As a U.S. finance lawyer practicing in Canada, Canadian lawyers and lenders frequently ask me about the filing of UCC financing statements. This blog entry describes a typical scenario and memorializes my answers to the...more

2014 Changes to the New York Uniform Commercial Code

The changes provide modernization but with some nonuniform provisions. On December 17, 2014, New York Governor Andrew Cuomo signed into law New York Assembly Bill 9933, which amends the Uniform Commercial Code (the...more

Review Twice, File Once, Review Again; UCC-3 Termination Intent Irrelevant

A “UCC-3 Termination Statement” is commonly used in secured transactions by a secured party to put the world on notice that the perfected security interest referenced in the UCC-3 filing is terminated. On October 17, 2014,...more

Factor Beware: A Judgment Lien Creditor in California May Have Priority Over Your Security Interest

A factor may receive notice from a judgment creditor that the judgment creditor holds a judgment lien on the accounts of the factor’s client, and be tempted to ignore the notice, since the judgment lien is later in time than...more

Loan to Own: A Potpourri of Bankruptcy Attacks

Colony Beach & Tennis Club Ass’n, Inc. v. Colony Lender, LLC (In re Colony Beach & Tennis Club, Inc.), 508 B.R. 468 (Bankr. M.D. Fla. 2014) – Three affiliated debtors (RMI, CBTC and CBI) proposed a plan of...more

Delaware Supreme Court: A Mistakenly Authorized UCC Termination Statement is Effective to Terminate Original UCC Filing

On October 17, 2014, the Delaware Supreme Court entered an opinion holding that a UCC-3 termination statement that is authorized by the secured party is effective to terminate the original UCC filing even though the secured...more

Delaware Supreme Court Finds UCC Termination Filings Valid Despite Lack of Lender’s Intent

On October 17, the Delaware Supreme Court held that JP Morgan (JPM) terminated its security interest in all of the collateral provided by General Motors (GM) in support of a $1.5 billion loan, despite neither party intending...more

Disputes in the Manufacturing Supply Chain

Disputes in the automotive supply chain often involve questions concerning warranties, warranty disclaimers, limitations on remedies and limitations on damages. Understanding the basics of warranty law is critical to managing...more

Second Circuit Considers "No Oral Modification" Clause in Helicopter Contract - The Court Examined Exceptions to "No Oral...

The Second Circuit recently issued a summary decision concerning the scope of a "no oral modification" clause in contracts governing the sale of helicopters. The underlying dispute involved three separate helicopter purchase...more

Bankruptcy Courts Fail to Enlighten on Electricity as Goods or Services

Is electricity goods or services? That seemingly simple yet confounding question is illustrated by three recent bankruptcy cases (all of which consider whether an electricity provider is entitled to an administrative expense...more

Delaware Supreme Court Rules Mistakenly Filed UCC Termination Statement Is Effective in $1.5 Billion Secured Loan Transaction

Lenders need to exercise great caution when filing a UCC-3 termination statement. They must make sure that the list of security interests terminated is accurate and that the statement does not mistakenly include other,...more

FHA Multifamily Rental Project Closing Document Revisions

The U.S. Department of Housing and Urban Development (HUD) has released revised closing documents that must be used for all transactions with a commitment issued after August 10, 2014. HUD has instituted a grace period in...more

NJ Banks May Not Face Common Law Tort Claims for Improper Electronic Funds Transfers

The New Jersey Supreme Court in a matter of first impression held that a non-customer of a bank cannot bring a common law negligence claim against that bank for an improper money transfer via the Internet. In ADS Associates...more

California Amends Uniform Commercial Code Article 9 Regarding Name of Individual Debtor on Financing Statements

The California Legislature passed, and Governor Brown signed, Assembly Bill No. 1858, which changes the way individual debtors are identified in Uniform Commercial Code financing statements. The bill brings California into...more

Insurers, Be Ready To Pay Twice In Texas

Often, an insurance carrier will issue a check to two joint payees — the named insured and either a public adjuster or a mortgagee. What happens when the one payee cashes the check without first obtaining a signature from the...more

Best Practices in Drafting U.S. Government Subcontract Terms and Conditions

Federal government subcontracts are a hybrid between commercial contracts governed by state law (such as, for the sale of goods, the Uniform Commercial Code) and government contracts governed by the Federal Acquisition...more

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