This article summarizes several important statutory changes contained in the Amendments. Debtor Name. The Amendments provide guidance on what name is to be provided on a financing statement with respect to an individual debtor, offering states two alternatives. Secured parties have always required debtors to notify the secured party of any name change. This requirement led to confusion as to the public record on which a secured party should rely. Change of Governing Law.
The Amendments also deal with the effect of a change in the governing law of a debtor. While a debtor is located [2] in a jurisdiction, the local law of that jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in collateral [3] and a secured party must file in accordance with the law of the jurisdiction in which the debtor is located in order to perfect its security interest.
Further, the Amendments provide that if an original debtor under an existing security agreement with a secured party SP1 is succeeded by a new debtor for example, pursuant to a merger and the new debtor is located in a different jurisdiction, a security interest will be perfected with respect to collateral acquired by the new debtor before, and within four months after, the new debtor becomes bound.
As under the current Article 9, creditors are advised to perfect their security interest by filing in a new jurisdiction as soon as possible if a debtor is undergoing a merger where it will be succeeded by a new entity in a different location.
Other Simplifications. The foregoing summarizes select portions of the Amendments set to go into effect July 1, Loan Basics.
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List of Partners vendors. Your Money. Personal Finance. Your Practice. Popular Courses. Economics Microeconomics. What Is Article 9? Key Takeaways Article 9 is a section under the UCC governing secured transactions including the creation and enforcement of debts. Article 9 spells out the procedure for settling debts, including various types of collateralized loans and bonds. In particular, Article 9 sets out the interests established by the creation of a credit-debt relationship.
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Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace. A UCC-1 statement is a document which serves as a lien on commercial property in a business loan. Discover more about UCC-1 statements here. Inside Purchase Money Security Interest A purchase money security interest is a legal first claim to repossess property financed with its loan when a borrower defaults.
Blanket Lien A blanket lien is a lien that gives the right to seize, in the event of nonpayment, all types of assets serving as collateral owned by a debtor. Security Interest Security interest is a legal claim on collateral that has been pledged, usually to obtain a loan, that gives a creditor the right to repossession. Perfected Lien A perfected lien is a lien that has been filed with the appropriate filing agent in order to make the securing interest in an asset binding.
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