Secured Transactions
Assignment 18
Financing Statements: Other
Information
1
The Big Picture
Part One: The Creditor-Debtor Relationship
Part Two: The Creditor Third Party Relationship
Chapter 6-7: Perfection
Assignment 16: Filing Systems
Assignment 17: Financing Statements: The
Debtor’s
Name
Assignment 18: Financing Statements: Other
Information
Chapter 8-9: Priority
2
The Big Picture
Part One: The Creditor-Debtor Relationship
Part Two: The Creditor Third Party Relationship
Chapter 6-7: Perfection
Assignment 16: Filing Systems
Assignment 17: Financing Statements: The Debtor’s
Name
Assignment 18: Financing Statements: Other
Information
Chapter 8-9: Priority
3
The Big Picture
Part One: The Creditor-Debtor Relationship
Part Two: The Creditor Third Party Relationship
Chapter 6-7: Perfection
Assignment 16: Filing Systems
Assignment 17: Financing Statements: The Debtor’s
Name
Assignment 18: Financing Statements: Other
Information
Chapter 8-9: Priority
4
The Big Picture
Theory of the filing system: First takers communicate their
interests to later takers
Problems:
1. They must be filing and searching in the same system
2. They must be filing and searching in the same name
3. Searcher may need more information
To weed out the false positives: “Is this my debtor?
Is this my collateral?”
To make additional inquiry (of the secured party)
So financing statement should contain eight more pieces of
information
5
The Big Picture
Theory of the filing system: First takers communicate their
interests to later takers
Problems:
1. They must be filing and searching in the same system
2. They must be filing and searching in the same name
3. Searcher may need more information
To weed out the false positives: “Is this my debtor?
Is this my collateral?”
To make additional inquiry (of the secured party)
So financing statement should contain eight more pieces of
information
6
The Big Picture
Theory of the filing system: First takers communicate their
interests to later takers
Problems:
1. They must be filing and searching in the same system
2. They must be filing and searching in the same name
3. Searcher may need more information
To weed out the false positives: “Is this my debtor?
Is this my collateral?”
To make additional inquiry (of the secured party)
So financing statement should contain eight more pieces of
information
7
The Big Picture
Theory of the filing system: First takers communicate their
interests to later takers
Problems:
1. They must be filing and searching in the same system
2. They must be filing and searching in the same name
3. Searcher may need more information
To weed out the false positives: “Is this my debtor?
Is this my collateral?”
To make additional inquiry (of the secured party)
So financing statement should contain eight more pieces of
information
8
The Big Picture
Theory of the filing system: First takers communicate their
interests to later takers
Problems:
1. They must be filing and searching in the same system
2. They must be filing and searching in the same name
3. Searcher may need more information. Is this filer ahead
of me?
To weed out the false positives: “Is this my debtor?
Is this my collateral?”
To make additional inquiry (of the secured party)
So financing statement
9
The Big Picture
Theory of the filing system: First takers communicate their
interests to later takers
Problems:
1. They must be filing and searching in the same system
2. They must be filing and searching in the same name
3. Searcher may need more information.
Is this my debtor? (False positives)
10
The Big Picture
Theory of the filing system: First takers communicate their
interests to later takers
Problems:
1. They must be filing and searching in the same system
2. They must be filing and searching in the same name
3. Searcher may need more information.
Is this my debtor? (False positives)
Is this my collateral?
11
The Big Picture
Theory of the filing system: First takers communicate their
interests to later takers
Problems:
1. They must be filing and searching in the same system
2. They must be filing and searching in the same name
3. Searcher may need more information.
Is this my debtor? (False positives)
Is this my collateral?
How do I find the secured creditor to ask?
12
The Big Picture
Theory of the filing system: First takers communicate their
interests to later takers
Problems:
1. They must be filing and searching in the same system
2. They must be filing and searching in the same name
3. Searcher may need more information.
Is this my debtor? (False positives)
Is this my collateral?
How do I find the secured creditor to ask?
So a financing statement should contain five more pieces of
information
13
What should be in a financing statement:
1.
Name of the debtor
2.
Name of the secured party
3.
Indication of collateral
4.
Mailing address of secured party
5.
Mailing address of debtor
6.
Individual or organization?
14
What must be in a financing statement:
1. To qualify for filing: §9-516(b)
1.
Name of the debtor
2.
Name of the secured party
3.
Not an indication of collateral
4.
Mailing address of secured party
5.
Mailing address of debtor
6.
Individual or organization?
15
What must be in a financing statement:
1. To qualify for filing: §9-516(b)
1.
Name of the debtor
2.
Name of the secured party
3.
Not an indication of collateral
4.
Mailing address of secured party
5.
Mailing address of debtor
6.
Individual or organization?
These three items
need not be correct
16
What must be in a filed financing statement:
2. Against a reliance purchaser: §9-506(a)
1.
Name of the debtor; not seriously misleading, §9502(a), 9-506(c)
2.
Name of the secured party; can’t seriously mislead but
might give rise to an estoppel, §9-506 Comment 2
3.
Indication of collateral; not seriously misleading
17
What must be in a filed financing statement:
2. Against a reliance purchaser: §9-506(a)
1.
Name of the debtor; not seriously misleading, §9502(a), 9-506(c)
2.
Name of the secured party; can’t seriously mislead but
might give rise to an estoppel, §9-506 Comment 2
3.
Indication of collateral; not seriously misleading
The totality of information included must not be seriously
misleading, §9-506(a).)
18
What must be in a filed financing statement:
2. Against a reliance purchaser: §9-506(a)
1.
Name of the debtor; not seriously misleading, §9502(a), 9-506(c)
2.
Name of the secured party; can’t seriously mislead but
might give rise to an estoppel, §9-506 Comment 2
3.
Indication of collateral; not seriously misleading
The totality of information included must not be seriously
misleading, §9-506(a).)
4 - 6. The defective filer loses to purchasers who give value
in reasonable reliance upon incorrect 9-516(b)(5)
information. (Hardly anyone.)
19
What must be in a filed financing statement:
3. Against a bankruptcy trustee §9-506(a)
1.
Name of the debtor; not seriously misleading, §9502(a), 9-506(c)
2.
Name of the secured party must be present but need
not be right, §9-506 Comment 2
3.
Indication of collateral; not seriously misleading
The totality of information included must not be seriously
misleading, §9-506(a).)
4 - 6. The defective filer loses to no one.
20
Terminology
Initial financing statement – UCC-1, shown in §9-521(a), text
at page 264
21
Terminology
Initial financing statement – UCC-1, shown in §9-521(a), text
at page 264
Amendments – form at §9-521(b)
Assignment: Transfers the secured party’s rights (optional)
Continuation statement: Makes the financing statement
effective for five more years
Termination statement: Makes the financing statement
ineffective.
Party Information change: Changes to names and
addresses
22
Terminology
Initial financing statement – UCC-1, shown in §9-521(a), text
at page 264
Amendments – form at §9-521(b)
Assignment: Transfers the secured party’s rights (optional)
Continuation statement: Makes the financing statement
effective for five more years
Termination statement: Makes the financing statement
ineffective.
Party Information change: Changes to names and
addresses
Financing statement – The initial financing statement plus all
amendments. §9-102(a)(39)
23
Problem 18.1, page 324
You have to file the financing statement now, but don’t
know the debtor’s address
a.
Leave the debtor’s address blank? Or fill in the
address of the lot next door?
24
Problem 18.1, page 324
You have to file the financing statement now, but don’t
know the debtor’s address
a.
Leave the debtor’s address blank? Or fill in the
address of the lot next door?
Answer: the SOS will rightfully reject a blank filing, §9516(b)(5)(C)(iii), but must accept an erroneous filing
b.
You include the phony address and the SOS rejects.
Are you perfected?
Answer: §9-516(d).
c.
What if the SOS accepts?
25
Problem 18.1, page 324
You have to file the financing statement now, but don’t
know the debtor’s address
a.
Leave the debtor’s address blank? Or fill in the
address of the lot next door?
Answer: the SOS will rightfully reject a blank filing, §9516(b)(5)(C)(iii), but must accept an erroneous filing
b.
You include the phony address and the SOS rejects.
Are you perfected?
Answer: §9-516(d).
c.
What if the SOS accepts?
Answer: You are at least lien-perfected. §9-520(c).
26
Problem 18.2, page 324
We represent a trustee in bankruptcy
We have the rights of a lien creditor who levied at bankruptcy,
Bankruptcy Code §544
UCC §9-317(a). A security interest is subordinate to the rights
of a person that becomes a lien creditor before the earlier of
the time:
(A) The security interest is perfected; or
(B) [A security agreement is entered into] and a financing
statement is filed
Financing statement must be sufficient. §9-502
27
Problem 18.2, page 324
UCC-1 item
Correct
information
Secured
123 Main St.
party address Madison, WI
Information
on the form
Blank
Authority
OK?
9-516 cmt 5
9-520 cmt 3
9-516 cmt 5
9-520 cmt 3
9-516 cmt 5
9-520 cmt 3
9-516 cmt 5
9-520 cmt 3
9-516 cmt 5
9-520 cmt 3
9-516 cmt 5
9-520 cmt 3
28
Problem 18.2, page 324
UCC-1 item
Correct
information
Secured
123 Main St.
party address Madison, WI
Information
on the form
Blank
Authority
OK?
9-516 cmt 5 OK
9-520 cmt 3
9-516 cmt 5
9-520 cmt 3
9-516 cmt 5
9-520 cmt 3
9-516 cmt 5
9-520 cmt 3
9-516 cmt 5
9-520 cmt 3
9-516 cmt 5
9-520 cmt 3
29
Problem 18.2, page 324
UCC-1 item
Correct
information
Secured
123 Main St.
party address Madison, WI
Indication of Case # 09collateral
1694, CD CA.
Information
on the form
Blank
Proceeds of
any lawsuit
Authority
OK?
9-516 cmt 5 OK
9-520 cmt 3
9-108(e),
cmt 5 last ¶
9-516 cmt 5
9-520 cmt 3
9-516 cmt 5
9-520 cmt 3
9-516 cmt 5
9-520 cmt 3
9-516 cmt 5
9-520 cmt 3
30
Problem 18.2, page 324
UCC-1 item
Correct
information
Secured
123 Main St.
party address Madison, WI
Indication of Case # 09collateral
1694, CD CA.
Information
on the form
Blank
Proceeds of
any lawsuit
Authority
OK?
9-516 cmt 5 OK
9-520 cmt 3
9-108(e),
Not
cmt 5 last ¶ OK
9-516 cmt 5
9-520 cmt 3
9-516 cmt 5
9-520 cmt 3
9-516 cmt 5
9-520 cmt 3
9-516 cmt 5
9-520 cmt 3
31
Problem 18.2, page 324
UCC-1 item
Correct
information
Secured
123 Main St.
party address Madison, WI
Indication of Case # 09collateral
1694, CD CA.
Secured
Wardcorp,
party name
Inc.
Information
on the form
Blank
Proceeds of
any lawsuit
Wills
Furniture
Authority
OK?
9-516 cmt 5 OK
9-520 cmt 3
9-108(e),
OK?
cmt 5 last ¶
9-503(c)
9-506 cmt 2
9-516 cmt 5
9-520 cmt 3
9-516 cmt 5
9-520 cmt 3
9-516 cmt 5
9-520 cmt 3
32
Problem 18.2, page 324
UCC-1 item
Correct
information
Secured
123 Main St.
party address Madison, WI
Indication of Case # 09collateral
1694, CD CA.
Secured
Wardcorp,
party name
Inc.
Information
on the form
Blank
Proceeds of
any lawsuit
Wills
Furniture
Authority
OK?
9-516 cmt 5 OK
9-520 cmt 3
9-108(e),
OK?
cmt 5 last ¶
9-503(c)
OK?
9-506 cmt 2
9-516 cmt 5
9-520 cmt 3
9-516 cmt 5
9-520 cmt 3
9-516 cmt 5
9-520 cmt 3
33
Problem 18.2, page 324
UCC-1 item
Correct
information
Secured
123 Main St.
party address Madison, WI
Indication of Case # 09collateral
1694, CD CA.
Secured
Wardcorp,
party name
Inc.
Secured
Lynn M.
party name
LoPucki
Information
on the form
Blank
Proceeds of
any lawsuit
Wills
Furniture
Elizabeth
Warren
Authority
OK?
9-516 cmt 5 OK
9-520 cmt 3
9-108(e),
OK?
cmt 5 last ¶
9-503(c)
OK?
9-506 cmt 2
9-506(a)
and cmt 2
9-516 cmt 5
9-520 cmt 3
9-516 cmt 5
9-520 cmt 3
34
Problem 18.2, page 324
UCC-1 item
Correct
information
Secured
123 Main St.
party address Madison, WI
Indication of Case # 09collateral
1694, CD CA.
Secured
Wardcorp,
party name
Inc.
Secured
Lynn M.
party name
LoPucki
Information
on the form
Blank
Proceeds of
any lawsuit
Wills
Furniture
Elizabeth
Warren
Authority
OK?
9-516 cmt 5
9-520 cmt 3
9-108(e),
cmt 5 last ¶
9-503(c)
9-506 cmt 2
9-506(a)
and cmt 2
9-516 cmt 5
9-520 cmt 3
9-516 cmt 5
9-520 cmt 3
OK
OK?
OK?
Not
OK?
35
Problem 18.2, page 324
UCC-1 item
Correct
information
Secured
123 Main St.
party address Madison, WI
Indication of Case # 09collateral
1694, CD CA.
Secured
Wardcorp,
party name
Inc.
Secured
Lynn M.
party name
LoPucki
Indication of Ovens at 514
collateral
E Washington
Information
on the form
Blank
Authority
9-516 cmt 5
9-520 cmt 3
Proceeds of 9-108(e),
any lawsuit
cmt 5 last ¶
Wills
9-503(c)
Furniture
9-506 cmt 2
Elizabeth
9-506(a)
Warren
and cmt 2
Ovens at
9-504
621 State St. 9-108
9-516 cmt 5
9-520 cmt 3
OK?
OK
OK?
OK?
Not
OK?
36
Problem 18.2, page 324
UCC-1 item
Correct
information
Secured
123 Main St.
party address Madison, WI
Indication of Case # 09collateral
1694, CD CA.
Secured
Wardcorp,
party name
Inc.
Secured
Lynn M.
party name
LoPucki
Indication of Ovens at 514
collateral
E Washington
Information
on the form
Blank
Authority
9-516 cmt 5
9-520 cmt 3
Proceeds of 9-108(e),
any lawsuit
cmt 5 last ¶
Wills
9-503(c)
Furniture
9-506 cmt 2
Elizabeth
9-506(a)
Warren
and cmt 2
Ovens at
9-504
621 State St. 9-108
9-516 cmt 5
9-520 cmt 3
OK?
OK
OK?
OK?
Not
OK?
Not
OK
37
Problem 18.2, page 324
UCC-1 item
Correct
information
Secured
123 Main St.
party address Madison, WI
Indication of Case # 09collateral
1694, CD CA.
Secured
Wardcorp,
party name
Inc.
Secured
Lynn M.
party name
LoPucki
Indication of Ovens at 514
collateral
E Washington
Indication of Equipment
collateral
Information
on the form
Blank
Authority
9-516 cmt 5
9-520 cmt 3
Proceeds of 9-108(e),
any lawsuit
cmt 5 last ¶
Wills
9-503(c)
Furniture
9-506 cmt 2
Elizabeth
9-506(a)
Warren
and cmt 2
Ovens at
9-504
621 State St. 9-108
Blank
9-108, 502
(a)(3), 504
OK?
OK
OK?
OK?
Not
OK?
Not
OK
38
Problem 18.2, page 324
UCC-1 item
Correct
information
Secured
123 Main St.
party address Madison, WI
Indication of Case # 09collateral
1694, CD CA.
Secured
Wardcorp,
party name
Inc.
Secured
Lynn M.
party name
LoPucki
Indication of Ovens at 514
collateral
E Washington
Indication of Equipment
collateral
Information
on the form
Blank
Authority
9-516 cmt 5
9-520 cmt 3
Proceeds of 9-108(e),
any lawsuit
cmt 5 last ¶
Wills
9-503(c)
Furniture
9-506 cmt 2
Elizabeth
9-506(a)
Warren
and cmt 2
Ovens at
9-504
621 State St. 9-108
Blank
9-108, 502
(a)(3), 504
OK?
OK
OK?
OK?
Not
OK?
Not
OK
Not
OK
39
Problem 18.3, page 325
Smith has $26K judgment; sees these filed financing statements:
Financing
statement
Financing
statement
Financing
statement
Financing
statement
Trimble
store
40
Problem 18.3, page 325
Smith has $26K judgment; sees these filed financing statements:
Financing
statement
Financing
statement
Financing
statement
Financing
statement
Trimble
store
Security agreement?
a. If Glacier Bank’s Security Agreement covers the Trimble
Store and one of the financing statements was intended to,
could Glacier be perfected?
41
Problem 18.3, page 325
Smith has $26K judgment; sees these filed financing statements:
Financing
statement
Financing
statement
Financing
statement
Financing
statement
Trimble
store
Security agreement?
a. If Glacier Bank’s Security Agreement covers the Trimble
Store and one of the financing statements was intended to,
could Glacier be perfected? Teel arguably? Pickle no.
42
Problem 18.3, page 325
Smith has $26K judgment; sees these filed financing statements:
Financing
statement
Financing
statement
Financing
statement
Financing
statement
Trimble
store
Security agreement?
a. If Glacier Bank’s Security Agreement covers the Trimble
Store and one of the financing statements was intended to,
could Glacier be perfected? Teel arguably? Pickle no.
b. What should we do?
43
Problem 18.3, page 325
Smith has $26K judgment; sees these filed financing statements:
Financing
statement
Financing
statement
Financing
statement
Financing
statement
Trimble
store
Security agreement?
a. If Glacier Bank’s Security Agreement covers the Trimble
Store and one of the financing statements was intended to,
could Glacier be perfected? Teel arguably? Pickle no.
b. What should we do? Call Glacier and ask?
44
Problem 18.4, page 325
Smith has $26K judgment; sees these filed financing statements:
Financing
statement
Financing
statement
Financing
statement
Financing
statement
Trimble
store
Security agreement
We represent Glacier Bank. We were supposed to have the
Trimble store, but Trimble is not in our SA description.
45
Problem 18.4, page 325
Smith has $26K judgment; sees these filed financing statements:
Financing
statement
Financing
statement
Financing
statement
Financing
statement
Trimble
store
Security agreement
We represent Glacier Bank. We were supposed to have the
Trimble store, but Trimble is not in our SA description.
a. Smith’s lawyer calls. What should we say?
Glacier Smith
Us
46
Lawyer
Problem 18.4, page 325
Smith has $26K judgment; sees these filed financing statements:
Financing
statement
Financing
statement
Financing
statement
Financing
statement
Trimble
store
Security agreement
We represent Glacier Bank. We were supposed to have the
Trimble store, but Trimble is not in our SA description.
a. Smith’s lawyer calls. What should we say?
Glacier Smith
b. Different if call is from another bank? §9-210.
47
Us
Lawyer
Problem 18.3, page 325
Smith has $26K judgment; sees these filed financing statements:
Financing
statement
Financing
statement
Financing
statement
Financing
statement
Trimble
store
Security agreement?
a. If Glacier Bank’s Security Agreement covers the Trimble
Store and one of the financing statements was intended to,
could Glacier be perfected? Teel arguably? Pickle no.
b. What should we do? Call Glacier and ask? No. Levy
or fold?
48
Problem 18.5, page 325
Walter’s Department Store wants to file financing statements
on thousands of consumer debtor customers.
49
Problem 18.5, page 325
Walter’s Department Store wants to file financing statements
on thousands of consumer debtor customers.
a.
Does Walter’s need permission?
50
Problem 18.5, page 325
Walter’s Department Store wants to file financing statements
on thousands of consumer debtor customers.
a.
Does Walter’s need permission?
§9-509(a). A person may file an initial financing
statement . . . only if the debtor authorizes the filing in an
authenticated record or pursuant to (b) or (c).
51
Problem 18.5, page 325
Walter’s Department Store wants to file financing statements
on thousands of consumer debtor customers.
a.
Does Walter’s need permission?
§9-509(a). A person may file an initial financing
statement . . . only if the debtor authorizes the filing in an
authenticated record or pursuant to (b) or (c).
(b) By authenticating . . . a security agreement , a debtor .
. . authorizes the filing of an initial financing statement.
52
Problem 18.5, page 325
Walter’s Department Store wants to file financing statements
on thousands of consumer debtor customers.
a.
Does Walter’s need permission?
§9-509(a). A person may file an initial financing
statement . . . only if the debtor authorizes the filing in an
authenticated record or pursuant to (b) or (c).
(b) By authenticating . . . a security agreement , a debtor .
. . authorizes the filing of an initial financing statement.
b.
What should Walter’s use as a description of collateral?
Problem 9.2.
53
Problem 18.5, page 325
Walter’s Department Store wants to file financing statements
on thousands of consumer debtor customers.
a.
Does Walter’s need permission?
§9-509(a). A person may file an initial financing
statement . . . only if the debtor authorizes the filing in an
authenticated record or pursuant to (b) or (c).
(b) By authenticating . . . a security agreement , a debtor .
. . authorizes the filing of an initial financing statement.
b.
What should Walter’s use as a description of collateral?
Problem 9.2.
Same as in the security agreement. §9-509(b), §9-625(e)
54
Problem 18.5, page 325
Walter’s Department Store wants to file financing statements
on thousands of consumer debtor customers
a.
Does Walter’s need permission?
§9-509(a). A person may file an initial financing
statement . . . only if the debtor authorizes the filing in an
authenticated record or pursuant to (b) or (c).
(b) By authenticating . . . a security agreement , a debtor .
. . authorizes the filing of an initial financing statement.
b.
What should Walter’s use as a description of collateral?
Problem 9.2.
Same as in the security agreement. §9-509(b), §9-625(e)
What if the customer’s receipt is the security agreement?
55
Problem 18.5, page 325
Walter’s Department Store wants to file financing statements
on thousands of consumer debtor customers
a.
Does Walter’s need permission?
§9-509(a). A person may file an initial financing
statement . . . only if the debtor authorizes the filing in an
authenticated record or pursuant to (b) or (c).
(b) By authenticating . . . a security agreement , a debtor .
. . authorizes the filing of an initial financing statement.
b.
What should Walter’s use as a description of collateral?
Problem 9.2.
Same as in the security agreement. §9-509(b), §9-625(e)
What if the customer’s receipt is the security agreement?
c.
What practical problems do you foresee?
56