250A. Commercial Law: Secured Transactions
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Secured Transactions 1 Some Preliminary Matters • See Syllabus posted on website. • First assignment: Introduction to Secured Credit • PowerPoint posted on website 2 Administrative Matters • Required Books – LoPucki & Warren, Secured Credit, 7th edition – Warren, Bankruptcy and Article 9: Stat Supp. • Recommended Books – See Syllabus • Selected Coverage: 40 assignments, average of one per day • For next class: Assignment 1 3 Administrative Matters • Read attendance policy carefully. Failure to comply may affect your grade!! • Final grade predominantly based on the final but there are three practical exercises with the negotiation and drafting one carrying the most weight. 4 PowerPoint Presentations • Guide discussions by displaying statutes, assumptions, questions • Available on website • Very long to print: be ware • Also Be Careful with similar slides over internet. These contain differneces 5 Methodology we think we shall commence our exposition of the law of the Roman people most advantageously, if we pursue at first a plain and easy path, and then proceed to explain particular details with the utmost care and exactness. For, if at the outset we overload the mind of the student, while yet new to the subject and unable to bear much, with a multitude and variety of topics, one of two things will happen---we shall either cause him wholly to abandon his studies, or, after great toil, and often after great distrust to himself (the most frequent stumbling block in the way of youth), we shall at last conduct him to the point, to which, if he had been led by an easier road, he might, without great labor, and without any distrust of his own powers, 6 have been sooner conducted. Justinian Institutes Methodology • Introduce the basic concepts • Draw out nuances • Apply in problems 7 What you will learn in this course • Common forms for business transactions. Lending, asset securitization, sales of businesses, accounts receivable, intellectual property • Governing law (reading and applying statutes) • Legal strategy: What lawyers do with problems • Skill: playing the game 8 Most closely analogous game Musical Chairs 9 Most closely analogous game Creditors Business Assets Secured Transactions 10 The Secured Transactions Game 1. Difference: players can reserve seats in advance 2. Game: You must play to learn. Problems, statutes, text 3. Much of each class in discussion of problems, cold calling 4. Use your laptop wisely not as a court reporter 11 What you will learn in this course • Common forms for business transactions. Lending, asset securitization, sales of businesses, accounts receivable, motor vehicles, intellectual property • Governing law (application of codes) • Legal strategy: What lawyers do with problems • Skill: playing the game – Enforcing deals: what happens when the music stops? 12 What you will learn in this course • Common forms for business transactions. Lending, asset securitization, sales of businesses, accounts receivable, motor vehicles, intellectual property • Governing law (application of codes) • Legal strategy: What lawyers do with problems • Skill: playing the game – Enforcing deals: what happens when the music stops? – Security: reserving seats in advance 13 What you will learn in this course • Common forms for business transactions. Lending, asset securitization, sales of businesses, accounts receivable, motor vehicles, intellectual property • Governing law (application of codes) • Legal strategy: What lawyers do with problems • Skill: playing the game – Enforcing deals: what happens when the music stops? – Security: reserving seats in advance – Game: You must play to learn 14 What you will learn in this course • Common forms for business transactions. Lending, asset securitization, sales of businesses, accounts receivable, motor vehicles, intellectual property • Governing law (application of codes) • Legal strategy: What lawyers do with problems • Skill: playing the game – Enforcing deals: what happens when the music stops? – Security: reserving seats in advance – Game: You must play to learn 15 Lien Security interest 16 Asset Lien Security interest Debt 1. A relationship between an asset and a debt: 17 Asset “Collateral” Lien Security interest Debt 1. A relationship between an asset and a debt: 18 Asset “Collateral” Lien Security interest Debt “Obligation” 1. A relationship between an asset and a debt: 19 Asset “Collateral” Lien Security interest Debt “Obligation” 1. A relationship between an asset and a debt: If the debt is not paid when due, the secured creditor can require that the property be sold and the proceeds applied to payment 20 Asset “Collateral” Lien Security interest Debt “Obligation” 1. A relationship between an asset and a debt: If the debt is not paid when due, the secured creditor can require that the property be sold and the proceeds applied to payment (“foreclosure”) 21 Asset “Collateral” Lien Security interest Debt “Obligation” 1. A relationship between an asset and a debt: If the debt is not paid when due, the secured creditor can require that the property be sold and the proceeds applied to payment (“foreclosure”) 2. An interest in property, contingent on the nonpayment of a debt 22 Asset “Collateral” Lien Security interest Mortgage Debt “Obligation” 1. A relationship between an asset and a debt: If the debt is not paid when due, the secured creditor can require that the property be sold and the proceeds applied to payment (“foreclosure”) 2. An interest in property, contingent on the nonpayment of a debt 23 Asset “Collateral” Lien Security interest Mortgage Debt “Obligation” 1. A relationship between an asset and a debt: If the debt is not paid when due, the secured creditor can require that the property be sold and the proceeds applied to payment (“foreclosure”) 2. An interest in property, contingent on the nonpayment of a debt 24 Collateral Lien Security interest Secured Obligation 25 Collateral Real estate Equipment Accounts Inventory Patents Trademarks Copyrights Crops Lien Security interest Livestock Bank Accounts Chattel paper Realty paper Aircraft Ships Mobile homes Automobiles Secured Obligation Warehouse receipts Stock Leases Certificate of deposit Instruments Software Lottery tickets Fixtures 26 Collateral Real estate Equipment Accounts Inventory Patents Trademarks Copyrights Crops Lien Security interest Livestock Bank Accounts Chattel paper Realty paper Aircraft Ships Mobile homes Automobiles Secured Obligation Warehouse receipts Stock Leases Certificate of deposit Instruments Software Lottery tickets Fixtures 27 Collateral Real estate Equipment Accounts Inventory Patents Trademarks Copyrights Crops Lien Security interest Livestock Bank Accounts Chattel paper Realty paper Aircraft Ships Mobile homes Automobiles Secured Obligation Warehouse receipts Stock Leases Certificate of deposit Instruments Software Lottery tickets Fixtures 28 Collateral Real estate Equipment Accounts Inventory Patents Trademarks Copyrights Crops Lien Security interest Livestock Bank Accounts Chattel paper Realty paper Aircraft Ships Mobile homes Automobiles Secured Obligation Warehouse receipts Stock Leases Certificate of deposit Instruments Software Lottery tickets Fixtures 29 Collateral Real estate Equipment Accounts Inventory Patents Trademarks Copyrights Crops Lien Security interest Livestock Bank Accounts Chattel paper Realty paper Aircraft Ships Mobile homes Automobiles Secured Obligation Warehouse receipts Stock Leases Certificate of deposit Instruments Software Lottery tickets Fixtures 30 Collateral Real estate Equipment Accounts Inventory Patents Trademarks Copyrights Crops Lien Security interest Livestock Bank Accounts Chattel paper Realty paper Aircraft Ships Mobile homes Automobiles Secured Obligation Warehouse receipts Stock Leases Certificate of deposit Instruments Software Lottery tickets Fixtures 31 Collateral Real estate Equipment Accounts Inventory Patents Trademarks Copyrights Crops Lien Security interest Livestock Bank Accounts Chattel paper Realty paper Aircraft Ships Mobile homes Automobiles Secured Obligation Warehouse receipts Stock Leases Certificate of deposit Instruments Software Lottery tickets Fixtures 32 Collateral Lien Security interest Secured Obligation Real estate Livestock Warehouse receipts Equipment Bank Accounts Stock Accounts Chattel paper Leases Inventory Realty paper Certificate of deposit Patents Aircraft Instruments Trademarks Ships Software Copyrights Mobile homes Lottery tickets Crops Automobiles Fixtures Each of these categories has different rules! 33 Collateral Lien Security interest Secured Obligation 34 Collateral Lien Security interest Loans Home Auto Business Construction Real estate Secured Obligation Purchase price Corporate bonds Guarantees Contract obligations 35 Collateral Lien Security interest Loans Home Auto Business Construction Real estate Secured Obligation Purchase price Corporate bonds Guarantees Contract obligations 36 Collateral Lien Security interest Loans Home Auto Business Construction Real estate Secured Obligation Purchase price Corporate bonds Guarantees Contract obligations 37 Collateral Lien Security interest Loans Home Auto Business Construction Real estate Secured Obligation Purchase price Corporate bonds Guarantees Contract obligations 38 Collateral Lien Security interest Loans Home Auto Business Construction Real estate Secured Obligation Purchase price Corporate bonds Guarantees Contract obligations 39 Collateral Lien Secured Obligation 40 Lien Collateral Security interests Lien Secured Obligation Statutory liens Judicial liens 41 Lien Collateral Security interests Article 9 SI Mortgages Other SI Lien Statutory liens Agricultural Mechanics’ Tax Landlord’s Charging Hospital Warehouse Secured Obligation Judicial liens Judgment Attachment Garnishment Equitable 42 Lien Collateral Security interests Article 9 SI Mortgages Other SI Lien Statutory liens Agricultural Mechanics’ Tax Landlord’s Charging Hospital Warehouse Secured Obligation Judicial liens Judgment Attachment Garnishment Equitable 43 Lien Collateral Security interests Article 9 SI Mortgages Other SI Lien Statutory liens Agricultural Mechanic’s Tax Landlord’s Charging Hospital Warehouse Secured Obligation Judicial liens Judgment Attachment Garnishment Equitable 44 Lien Collateral Security interests Article 9 SI Mortgages Other SI Lien Statutory liens Agricultural Mechanic’s Tax Landlord’s Charging Hospital Warehouse Secured Obligation Judicial liens Judgment Attachment Garnishment Equitable 45 Lien Collateral Security interests Article 9 SI Mortgages Other SI Lien Statutory liens Agricultural Mechanic’s Tax Landlord’s Charging Hospital Warehouse Secured Obligation Judicial liens Judgment Attachment Garnishment Equitable 46 Lien Collateral Security interests Article 9 SI Mortgages Other SI Lien Statutory liens Agricultural Mechanic’s Tax Landlord’s Charging Hospital Warehouse Secured Obligation Judicial liens Judgment Attachment Garnishment Equitable 47 Lien Collateral Security interests Article 9 SI Mortgages Other SI Lien Statutory liens Agricultural Mechanic’s Tax Landlord’s Charging Hospital Warehouse Secured Obligation Judicial liens Judgment Attachment Garnishment Equitable 48 Lien Collateral Security interests Article 9 SI Mortgages Other SI Lien Statutory liens Agricultural Mechanic’s Tax Landlord’s Charging Hospital Warehouse Secured Obligation Judicial liens Judgment Attachment Garnishment Equitable 49 Lien Collateral Security interests Article 9 SI Mortgages Other SI Lien Statutory liens Agricultural Mechanic’s Tax Landlord’s Charging Hospital Warehouse Secured Obligation Judicial liens Judgment Attachment Garnishment Equitable 50 Lien Collateral Security interests Article 9 SI Mortgages Other SI Lien Statutory liens Agricultural Mechanic’s Tax Landlord’s Charging Hospital Warehouse Secured Obligation Judicial liens Judgment Execution Attachment Garnishment Equitable 51 Lien Collateral Security interests Article 9 SI Mortgages Other SI Lien Statutory liens Agricultural Mechanic’s Tax Landlord’s Charging Hospital Warehouse Secured Obligation Judicial liens Judgment Execution Attachment Garnishment Equitable 52 Lien Collateral Security interests Article 9 SI Mortgages Other SI Lien Statutory liens Agricultural Mechanic’s Tax Landlord’s Charging Hospital Warehouse Secured Obligation Judicial liens Judgment Execution Attachment Garnishment Equitable 53 Lien Collateral Security interests Article 9 SI Mortgages Other SI Lien Statutory liens Agricultural Mechanic’s Tax Landlord’s Charging Hospital Warehouse Secured Obligation Judicial liens Judgment Execution Attachment Garnishment Equitable 54 Conceptual Lien System Map Lien 55 Conceptual Lien System Map Obligation Lien Collateral 56 Conceptual Lien System Map Creditor Lienor Obligation Lien Collateral Debtor Obligor 57 Conceptual Lien System Map Lienor Obligation Lien Collateral Rights Obligor ¦ Debtor 58 Conceptual Lien System Map Lienor Foreclosure Obligation Lien Collateral Rights Obligor ¦ Debtor 59 Conceptual Lien System Map Lienor Foreclosure Obligation Lien Deficiency Collateral Rights Obligor ¦ Debtor 60 Conceptual Lien System Map Lienor Foreclosure Value Obligation Lien Deficiency Collateral Rights Obligor ¦ Debtor 61 Conceptual Lien System Map Lienor Future advances Value Foreclosure Obligation Lien Payments Deficiency Collateral Rights Obligor ¦ Debtor 62 Conceptual Lien System Map Lienor Future advances Value Foreclosure Obligation Lien Payments Deficiency Obligor ¦ Debtor Collateral Rights After acquired property Sellers 63 Conceptual Lien System Map Lienor Future advances Value Buyers Foreclosure Obligation Lien Payments Deficiency Obligor ¦ Debtor Sale Collateral Rights After acquired property Sellers 64 Conceptual Lien System Map Lienor Future advances Value Buyers Foreclosure Obligation Lien Payments Deficiency Obligor ¦ Debtor Sale Proceeds Collateral Rights After acquired property Sellers 65 Conceptual Lien System Map Competing lienors Competing liens Lienor Future advances Value Buyers Foreclosure Obligation Lien Payments Deficiency Obligor ¦ Debtor Sale Proceeds Collateral Rights After acquired property Sellers 66 Conceptual Lien System Map Filing System Competing lienors Competing liens Lienor Future advances Value Buyers Foreclosure Obligation Lien Payments Deficiency Obligor ¦ Debtor Sale Proceeds Collateral Rights After acquired property Sellers 67 Conceptual Lien System Map Filing System File/ search File/search Competing liens Lienor Future advances Value Competing lienors Buyers Foreclosure Obligation Lien Payments Deficiency Obligor ¦ Debtor Sale Proceeds Collateral Rights After acquired property Sellers 68 Conceptual Lien System Map Filing System Competing lienors File/ search File/search Competing liens Lienor Future advances Value Priority Foreclosure Obligation Lien Payments Deficiency Obligor ¦ Debtor Buyers Sale Proceeds Collateral Rights After acquired property Sellers 69 Conceptual Lien System Map Questions? Filing System Competing lienors File/ search File/search Competing liens Lienor Future advances Value Priority Foreclosure Obligation Lien Payments Deficiency Obligor ¦ Debtor Buyers Sale Proceeds Collateral Rights After acquired property Sellers 70 Part I: Debtor vs. Creditor 1. Creditor remedies, state law. What is a SI? Foreclosure Repossession Sale 2. Creditor remedies, bankruptcy law. Lifting the automatic stay How much do creditors get? 3. Creation and scope. How does one get a SI? Security agreement Description of collateral and obligation Proceeds 4. Default, Acceleration and Cure (payment structure) State law (acceleration); bankruptcy law (cure) 71 Part II: Creditor vs. Creditor 5. Perfection: Giving notice to establish priority Filing systems (leaving a message) Contents of filings (debtor name problem) Other means of perfection (possession, control) 6. Maintaining perfection (self clearing system) Lapse and bankruptcy Changes of name, identity, use of collateral Interstate relocations 7. Priority (State rules, bankruptcy modifications) 8. Priority contests (not just first-come, first serve) Lots of different kinds of liens, buyers, sellers Purchase money Future advances 72
