Assignment 10

advertisement
Secured Transactions
Assignment 10
Proceeds, Products, and ValueTracing: State Law
1
The Big Picture
Chapters 1and 2. Creditors’ Remedies
Chapter 3. Creation of Security Interests
Assignment 8: Formalities for Attachment
Assignment 9: What Collateral and Obligations are
Covered?
Assignment 10: Proceeds (State Law)
Assignment 11: Proceeds (Bankruptcy)
2
Basic Concepts
§9-102(a)(64) “Proceeds” . . . means the following property:
(A) whatever is acquired upon the sale, lease, license,
exchange, or other disposition of collateral
(B) whatever is collected on, or distributed on account of,
collateral
(C) rights arising out of collateral
(D) to the extent of the value of collateral, claims arising out
of the loss . . . of, . . . or . . . damage to, the collateral.
(E) to the extent of the value of collateral . . . insurance
payable by reason of the loss . . . of . . . or damage to,
the collateral.
3
Basic Concepts
§9-102(a)(64) “Proceeds” . . . means the following property:
(A) whatever is acquired upon the sale, lease, license,
exchange, or other disposition of collateral
Secured
Security interest
Collateral
Buyer
Debtor
Proceeds
4
Basic Concepts
§9-102(a)(64) “Proceeds” . . . means the following property:
(A) whatever is acquired upon the sale, lease, license,
exchange, or other disposition of collateral
(B) whatever is collected on, or distributed on account of,
collateral
Secured
Security interest
in “accounts”
Debtor
Account
Account
debtors
5
Basic Concepts
§9-102(a)(64) “Proceeds” . . . means the following property:
(A) whatever is acquired upon the sale, lease, license,
exchange, or other disposition of collateral
(B) whatever is collected on, or distributed on account of,
collateral
(C) rights arising out of collateral
(D) to the extent of the value of collateral, claims arising out
of the loss . . . of, . . . orSecured
. . . damage to, the collateral.
(E) to the extent of the value of collateral . . . insurance
Security
payable by reason of the loss
. . . of .interest
. . or damage to,
in “accounts”
the collateral.
Account
Debtor$
debtors
Payment
6
Basic Concepts
§9-102(a)(64) “Proceeds” . . . means the following property:
(A) whatever is acquired upon the sale, lease, license,
exchange, or other disposition of collateral
(B) whatever is collected on, or distributed on account of,
collateral
(C) rights arising out of collateral
(D) to the extent of the value of collateral, claims arising out
of the loss . . . of, . . . orSecured
. . . damage to, the collateral.
(E) to the extent of the value of collateral . . . insurance
Security
payable by reason of the loss
. . . of .interest
. . or damage to,
the collateral.
Collateral
Debtor
Proceeds
7
Basic Concepts
§9-102(a)(64) “Proceeds” . . . means the following property:
(A) whatever is acquired upon the sale, lease, license,
exchange, or other disposition of collateral
(B) whatever is collected on, or distributed on account of,
collateral
(C) rights arising out of collateral
(D) to the extent of the value of collateral, claims arising out
of the loss . . . of, . . . or damage to, the collateral.
(E) to the extent of the value of collateral . . . insurance
Security
payable by reason of the loss
. . . of .interest
. . or damage to,
the collateral.
Collateral
Tortfeasor
Debtor
Loss claim
8
Basic Concepts
§9-102(a)(64) “Proceeds” . . . means the following property:
(A) whatever is acquired upon the sale, lease, license,
exchange, or other disposition of collateral
(B) whatever is collected on, or distributed on account of,
collateral
(C) rights arising out of collateral
(D) to the extent of the value of collateral, claims arising out
of the loss . . . of, . . . or damage to, the collateral.
Collateral: 100
Claim “arising from” loss of collateral: 300
Collateral
Recovery: 100
Proceeds: ?
Tortfeasor
Debtor
Loss claim
9
Basic Concepts
§9-102(a)(64) “Proceeds” . . . means the following property:
(A) whatever is acquired upon the sale, lease, license,
exchange, or other disposition of collateral
(B) whatever is collected on, or distributed on account of,
collateral
(C) rights arising out of collateral
(D) to the extent of the value of collateral, claims arising out
of the loss . . . of, . . . or damage to, the collateral.
Collateral: 100
Claim “arising from” loss of collateral: 300
Collateral
Recovery: 100
Proceeds: 100, not 33
Tortfeasor
Debtor
Loss claim
10
Basic Concepts
§9-102(a)(64) “Proceeds” . . . means the following property:
(A) whatever is acquired upon the sale, lease, license,
exchange, or other disposition of collateral
(B) whatever is collected on, or distributed on account of,
collateral
(C) rights arising out of collateral
(D) to the extent of the value of collateral, claims arising out
of the loss . . . of, . . . or damage to, the collateral.
(E) to the extent of the value of collateral . . . insurance
payable by reason of the loss . . . of, . . . or damage to,
the collateral.
Collateral
Insurance
Debtor
Company 11
Loss claim
Basic Concepts
§9-315(a)(1) a security interest . . . continues in collateral notwithstanding . . . disposition thereof unless the secured
party authorized the disposition free of the security interest
. . . . and
(2) a security interest attaches to any identifiable proceeds
of collateral
12
Basic Concepts
§9-315(a)(1) a security interest . . . continues in collateral notwithstanding . . . disposition thereof unless the secured
party authorized the disposition free of the security interest
. . . . and
(2) a security interest attaches to any identifiable proceeds
of collateral
ZBank
Security
Interest (Cow)
Debtor
13
Basic Concepts
§9-315(a)(1) a security interest . . . continues in collateral notwithstanding . . . disposition thereof unless the secured
party authorized the disposition free of the security interest
. . . . and
(2) a security interest attaches to any identifiable proceeds
of collateral
ZBank
Security
Interest (Cow)
Cow
Debtor
$2K
Cow
buyer
14
Basic Concepts
§9-315(a)(1) a security interest . . . continues in collateral notwithstanding . . . disposition thereof unless the secured
party authorized the disposition free of the security interest
. . . . and
(2) a security interest attaches to any identifiable proceeds
of collateral
ZBank
Security
Interest (Cow)
Cow
Debtor
$2K
Cow
buyer
15
Basic Concepts
§9-315(a)(1) a security interest . . . continues in collateral notwithstanding . . . disposition thereof unless the secured
party authorized the disposition free of the security interest
. . . . and
(2) a security interest attaches to any identifiable proceeds
of collateral
ZBank
Security
Interest (Cow)
Cow
Debtor
$2K
Cow
buyer
16
Basic Concepts
§9-315(a)(1) a security interest . . . continues in collateral notwithstanding . . . disposition thereof unless the secured
party authorized the disposition free of the security interest
. . . . and
(2) a security interest attaches to any identifiable proceeds
of collateral
ZBank
Bean
seller
Beans
$2K
Security
Interest (Cow)
Cow
Debtor
Cow
buyer
17
Basic Concepts
§9-315(a)(1) a security interest . . . continues in collateral notwithstanding . . . disposition thereof unless the secured
party authorized the disposition free of the security interest
. . . . and
(2) a security interest attaches to any identifiable proceeds
of collateral
ZBank
Bean
seller
Beans
$2K
Security
Interest (Cow)
Cow
Debtor
Cow
buyer
18
Basic Concepts
§9-315(a)(1) a security interest . . . continues in collateral notwithstanding . . . disposition thereof unless the secured
party authorized the disposition free of the security interest
. . . . and
(2) a security interest attaches to any identifiable proceeds
of collateral
ZBank
Bean
seller
Beans
$2K
§9-332(a). “A transferee of
money takes the money free
of a security interest . . . .”
Security
Interest (Cow)
Cow
Debtor
Cow
buyer
But bean seller takes the $2K free of the SI.
19
Basic Concepts
§9-315(a)(1) a security interest . . . continues in collateral notwithstanding . . . disposition thereof unless the secured
party authorized the disposition free of the security interest
. . . . and
(2) a security interest attaches to any identifiable proceeds
of collateral
ZBank
Security
Interest (Cow)
Bean
seller
Beans
$2K
Debtor
Cow
buyer
Cow
Cow
$2.5K buyer 2
20
Basic Concepts
§9-315(a)(1) a security interest . . . continues in collateral notwithstanding . . . disposition thereof unless the secured
party authorized the disposition free of the security interest
. . . . and
(2) a security interest attaches to any identifiable proceeds
of collateral
ZBank
Security
Interest (Cow)
Bean
seller
Beans
$2K
Debtor
Cow
buyer
Cow
Cow
$2.5K buyer 2
21
Basic Concepts
§9-315(a)(1) a security interest . . . continues in collateral notwithstanding . . . disposition thereof unless the secured
party authorized the disposition free of the security interest
. . . . and
(2) a security interest attaches to any identifiable proceeds
of collateral
ZBank
§9-332(a). “A transferee of
money takes the money free
of a security interest . . . .”
Security
Interest (Cow)
Bean
seller
Beans
$2K
Debtor
Cow
buyer
Cow
Cow
$2.5K buyer 2
Cow buyer does not take the $2.5K free of the SI.
Basic Concepts
§9-315(a)(1) a security interest . . . continues in collateral notwithstanding . . . disposition thereof unless the secured
party authorized the disposition free of the security interest
. . . . and
(2) a security interest attaches to any identifiable proceeds
of collateral
(b) Proceeds that are commingled with other property are
identifiable proceeds
(1) if the proceeds are goods, to the extent provided by §9336
§9-336. “commingled goods” means good that are physically
united with other goods in such a manner that their identity is
lost in a product or mass.
Examples: Grain in a grain silo. Steel in an automobile.
23
Basic Concepts
§9-315(a)(1) a security interest . . . continues in collateral notwithstanding . . . disposition thereof unless the secured
party authorized the disposition free of the security interest
. . . . and
(2) a security interest attaches to any identifiable proceeds
of collateral
(b) Proceeds that are commingled with other property are
identifiable proceeds
(1) if the proceeds are goods, to the extent provided by §9336
§9-336. “commingled goods” means good that are physically
united with other goods in such a manner that their identity is
lost in a product or mass.
Examples: Grain in a grain silo. Steel in an automobile.
24
Basic Concepts
§9-315(a)(1) a security interest . . . continues in collateral notwithstanding . . . disposition thereof unless the secured
party authorized the disposition free of the security interest
. . . . and
(2) a security interest attaches to any identifiable proceeds
of collateral
(b) Proceeds that are commingled with other property are
identifiable proceeds
(1) if the proceeds are goods, to the extent provided by §9336
§9-336. “commingled goods” means good that are physically
united with other goods in such a manner that their identity is
lost in a product or mass.
Examples: Grain in a grain silo. Steel in an automobile.
25
Basic Concepts
§9-315(a)(1) a security interest . . . continues in collateral notwithstanding . . . disposition thereof unless the secured
party authorized the disposition free of the security interest
. . . . and
(2) a security interest attaches to any identifiable proceeds
of collateral
(b) Proceeds that are commingled with other property are
identifiable proceeds
(1) if the proceeds are goods, to the extent provided by §9336
§9-336. “commingled goods” means good that are physically
united with other goods in such a manner that their identity is
lost in a product or mass.
Examples: Grain in a grain silo. Steel in an automobile.
26
Basic Concepts
§9-315(a)(1) a security interest . . . continues in collateral notwithstanding . . . disposition thereof unless the secured
party authorized the disposition free of the security interest
. . . . and
(2) a security interest attaches to any identifiable proceeds
of collateral
(b) Proceeds that are commingled with other property are
identifiable proceeds
(1) if the proceeds are goods, to the extent provided by §9336 and
(2) if the proceeds are not goods, to the extent that the
secured party identifies the proceeds by a method of
tracing . . . permitted under law other than this article
Example: Money commingled in a bank account
27
Basic Concepts
§9-315(a)(1) a security interest . . . continues in collateral notwithstanding . . . disposition thereof unless the secured
party authorized the disposition free of the security interest
. . . . and
(2) a security interest attaches to any identifiable proceeds
of collateral
(b) Proceeds that are commingled with other property are
identifiable proceeds
(1) if the proceeds are goods, to the extent provided by §9336 and
(2) if the proceeds are not goods, to the extent that the
secured party identifies the proceeds by a method of
tracing . . . permitted under law other than this article
Example: Money commingled in a bank account
28
Basic Concepts
The lowest intermediate balance rule:
29
Basic Concepts
The lowest intermediate balance rule:
[T]he proceeds of the disposition of collateral remain in a
commingled account as long as the account balance is equal
to or exceeds the amounts of the proceeds. – Oriental Rug
30
Basic Concepts
The lowest intermediate balance rule:
[T]he proceeds of the disposition of collateral remain in a
commingled account as long as the account balance is equal
to or exceeds the amounts of the proceeds. – Oriental Rug
Nonproceeds
Proceeds
31
Basic Concepts
The lowest intermediate balance rule:
[T]he proceeds of the disposition of collateral remain in a
commingled account as long as the account balance is equal
to or exceeds the amounts of the proceeds. – Oriental Rug
Nonproceeds
Non-proceeds
Proceeds
Proceeds
32
Basic Concepts
The lowest intermediate balance rule:
[T]he proceeds of the disposition of collateral remain in a
commingled account as long as the account balance is equal
to or exceeds the amounts of the proceeds. – Oriental Rug
Nonproceeds
Non-proceeds
Proceeds
Proceeds
Non-proceeds
Proceeds
33
Basic Concepts
Segregated bank account. A bank account containing only a
single secured creditor's collateral.
34
Basic Concepts
Segregated bank account. A bank account containing only a
single secured creditor's collateral.
Assume: Bank takes a security interest in “all inventory”
35
Basic Concepts
Segregated bank account. A bank account containing only a
single secured creditor's collateral.
Assume: Bank takes a security interest in “all inventory”
Loan proceeds $
Segregated
account
36
Basic Concepts
Segregated bank account. A bank account containing only a
single secured creditor's collateral.
Assume: Bank takes a security interest in “all inventory”
Loan proceeds $
Segregated
Payments
account
Suppliers
37
Basic Concepts
Segregated bank account. A bank account containing only a
single secured creditor's collateral.
Assume: Bank takes a security interest in “all inventory”
Loan proceeds $
Segregated
Payments
account
Debtor’s
inventory
Suppliers
Goods
38
Basic Concepts
Segregated bank account. A bank account containing only a
single secured creditor's collateral.
Assume: Bank takes a security interest in “all inventory”
Loan proceeds $
Customers
Goods
Segregated
Payments
account
Debtor’s
inventory
Suppliers
Goods
39
Basic Concepts
Segregated bank account. A bank account containing only a
single secured creditor's collateral.
Assume: Bank takes a security interest in “all inventory”
Loan proceeds $
Segregated
Payments
Payments
account
Customers
Suppliers
Debtor’s
Goods
Goods
inventory
40
Basic Concepts
Segregated bank account. A bank account containing only a
single secured creditor's collateral.
Assume: Bank takes a security interest in “all inventory”
Loan proceeds $
Segregated
Payments
Payments
account
Customers
Suppliers
Debtor’s
Goods
Goods
inventory
Owner investment
$
Proceeds of other loans
$
Tax refunds
$
Sale of non collateral
General
account
$
All other
expenditures
41
Problem 10.1, page 179
Firstbank’s description of collateral: “equipment, inventory,
and accounts”
1. Does this description cover the proceeds of this collateral?
Yes.
2. Does this description cover the products of this collateral?
Only if the products are proceeds or after acquired
inventory or accounts.
3. The offspring of this collateral?
4. Substitutions for this collateral?
5. Additions to this collateral?
6. Replacements for this collateral?
42
Problem 10.1, page 179
Firstbank’s description of collateral: “equipment, inventory,
and accounts”
1. Does this description cover the proceeds of this collateral?
43
Problem 10.1, page 179
Firstbank’s description of collateral: “equipment, inventory,
and accounts”
1. Does this description cover the proceeds of this collateral?
Yes. §9-203(f).
44
Problem 10.1, page 179
Firstbank’s description of collateral: “equipment, inventory,
and accounts”
1. Does this description cover the proceeds of this collateral?
Yes. §9-203(f).
2. Does this description cover the products, offspring,
substitutions, additions or replacements of this collateral?
45
Problem 10.1, page 179
Firstbank’s description of collateral: “equipment, inventory,
and accounts”
1. Does this description cover the proceeds of this collateral?
Yes. §9-203(f).
2. Does this description cover the products, offspring,
substitutions, additions or replacements of this collateral?
Only if the products are (1) proceeds or (2) after acquired
inventory or accounts.
46
Problem 10.2, page 179
Firstbank’s description of collateral: “equipment, inventory,
and accounts”
a. Does this description cover the money now in Polly’s bank
account? Only if it is proceeds.
b. A parrot that Polly took in payment of an overdue account?
Yes. “Proceeds includes “whatever is collected on . . .
Collateral.” §9-102(a)(64)(B).
c. A new computer Polly bought to replace the one she
owned at the time she granted the security interest? Not
unless it is proceeds. After-acquired equipment is not
included.
d. Myna bird
47
Problem 10.2, page 179
Firstbank’s description of collateral: “equipment, inventory,
and accounts”
a. Does this description cover the money now in Polly’s bank
account? Only if it is proceeds.
b. A parrot that Polly took in payment of an overdue account?
Yes. “Proceeds includes “whatever is collected on . . .
Collateral.” §9-102(a)(64)(B).
c. A new computer Polly bought to replace the one she
owned at the time she granted the security interest? Not
unless it is proceeds. After-acquired equipment is not
included.
d. Myna bird
48
Problem 10.2, page 179
Firstbank’s description of collateral: “equipment, inventory,
and accounts”
a. Does this description cover the money now in Polly’s bank
account? Only if it is proceeds.
b. A parrot that Polly took in payment of an overdue account?
Yes. “Proceeds includes “whatever is collected on . . .
Collateral.” §9-102(a)(64)(B).
c. A new computer Polly bought to replace the one she
owned at the time she granted the security interest? Not
unless it is proceeds. After-acquired equipment is not
included.
d. Myna bird
49
Problem 10.2, page 179
Firstbank’s description of collateral: “equipment, inventory,
and accounts”
a. Does this description cover the money now in Polly’s bank
account? Only if it is proceeds.
b. A parrot that Polly took in payment of an overdue account?
Yes. “Proceeds includes “whatever is collected on . . .
Collateral.” §9-102(a)(64)(B).
c. A new computer Polly bought to replace the one she
owned at the time she granted the security interest? Not
unless it is proceeds. After-acquired equipment is not
included.
d. Myna bird
50
Problem 10.2, page 179
Firstbank’s description of collateral: “equipment, inventory,
and accounts”
a. Does this description cover the money now in Polly’s bank
account? Only if it is proceeds.
b. A parrot that Polly took in payment of an overdue account?
Yes. “Proceeds includes “whatever is collected on . . .
collateral.” §9-102(a)(64)(B).
c. A new computer Polly bought to replace the one she
owned at the time she granted the security interest? Not
unless it is proceeds. After-acquired equipment is not
included.
d. Myna bird
51
Problem 10.2, page 179
Firstbank’s description of collateral: “equipment, inventory,
and accounts”
a. Does this description cover the money now in Polly’s bank
account? Only if it is proceeds.
b. A parrot that Polly took in payment of an overdue account?
Yes. “Proceeds includes “whatever is collected on . . .
collateral.” §9-102(a)(64)(B).
c. A new computer Polly bought to replace the one she
owned at the time she granted the security interest? Not
unless it is proceeds. After-acquired equipment is not
included.
d. Myna bird
52
Problem 10.2, page 179
Firstbank’s description of collateral: “equipment, inventory,
and accounts”
a. Does this description cover the money now in Polly’s bank
account? Only if it is proceeds.
b. A parrot that Polly took in payment of an overdue account?
Yes. “Proceeds includes “whatever is collected on . . .
collateral.” §9-102(a)(64)(B).
c. A new computer Polly bought to replace the one she
owned at the time she granted the security interest? Not
unless it is proceeds. After-acquired equipment is not in
this description.
d. Myna bird
53
Problem 10.2, page 179
Firstbank’s description of collateral: “equipment, inventory,
and accounts”
d. Myna bird Polly bought and paid for with plumbing work?
54
Problem 10.2, page 179
Firstbank’s description of collateral: “equipment, inventory,
and accounts”
d. Myna bird Polly bought and paid for with plumbing work?
No. Distinguish two situations:
Plumbing work
Plumbing work
account
bird contract
Myna bird
Myna bird
55
Problem 10.2, page 179
Firstbank’s description of collateral: “equipment, inventory,
and accounts”
d. Myna bird Polly bought and paid for with plumbing work?
No. Distinguish two situations:
Not collateral
Plumbing work
Collateral
account
Proceeds
Myna bird
Not collateral
Plumbing work
Not collateral
bird contract
Not collateral
Myna bird
56
Problem 10.2, page 179
Firstbank’s description of collateral: “equipment, inventory,
and accounts”
d. Myna bird Polly bought and paid for with plumbing work?
No. Distinguish two situations:
Not collateral
Plumbing work
Collateral
account
Proceeds
Myna bird
Not collateral
Plumbing work
Not collateral
bird contract
Not collateral
Myna bird
§9-102(a)(2) an “account” is a “monetary obligation”
57
Problem 10.3, page 180
ELP’s description of collateral: “Horace and all proceeds,
products, and profits therefrom.” Horace won a race.
Does ELP’s description cover the purse?
§9-102(a)(64) “Proceeds” . . . means the following property:
(A) whatever is acquired upon the sale, lease, license,
exchange, or other disposition of collateral
(B) whatever is collected on, or distributed on account
of, collateral
(C) rights arising out of collateral
Products: the result of fabrication or processing (Black’s)
Profits: (1) excess of revenues over expenses, (2) “a right in
the soil of another”
58
Problem 10.3, page 180
ELP’s description of collateral: “Horace and all proceeds,
products, and profits therefrom.” Horace won a race.
Does ELP’s description cover the purse?
§9-102(a)(64) “Proceeds” . . . means the following property:
(A) whatever is acquired upon the sale, lease, license,
exchange, or other disposition of collateral
Products: the result of fabrication or processing (Black’s)
Profits: (1) excess of revenues over expenses, (2) “a right in
the soil of another”
59
Problem 10.3, page 180
ELP’s description of collateral: “Horace and all proceeds,
products, and profits therefrom.” Horace won a race.
Does ELP’s description cover the purse?
§9-102(a)(64) “Proceeds” . . . means the following property:
(A) whatever is acquired upon the sale, lease, license,
exchange, or other disposition of collateral
(B) whatever is collected on, or distributed on account
of, collateral
Products: the result of fabrication or processing (Black’s)
Profits: (1) excess of revenues over expenses, (2) “a right in
the soil of another”
60
Problem 10.3, page 180
ELP’s description of collateral: “Horace and all proceeds,
products, and profits therefrom.” Horace won a race.
Does ELP’s description cover the purse?
§9-102(a)(64) “Proceeds” . . . means the following property:
(A) whatever is acquired upon the sale, lease, license,
exchange, or other disposition of collateral
(B) whatever is collected on, or distributed on account
of, collateral
(C) rights arising out of collateral
Products: the result of fabrication or processing (Black’s)
Profits: (1) excess of revenues over expenses, (2) “a right in
the soil of another”
61
Problem 10.3, page 180
ELP’s description of collateral: “Horace and all proceeds,
products, and profits therefrom.” Horace won a race.
Does ELP’s description cover the purse?
§9-102(a)(64) “Proceeds” . . . means the following property:
(A) whatever is acquired upon the sale, lease, license,
exchange, or other disposition of collateral
(B) whatever is collected on, or distributed on account
of, collateral
(C) rights arising out of collateral
Products: the result of fabrication or processing (Black’s)
Profits: (1) excess of revenues over expenses, (2) “a right in
the soil of another”
62
Problem 10.3, page 180
ELP’s description of collateral: “Horace and all proceeds,
products, and profits therefrom.” Horace won a race.
Does ELP’s description cover the purse?
§9-102(a)(64) “Proceeds” . . . means the following property:
(A) whatever is acquired upon the sale, lease, license,
exchange, or other disposition of collateral
(B) whatever is collected on, or distributed on account
of, collateral
(C) rights arising out of collateral
Products: the result of fabrication or processing (Black’s)
Profits: (1) excess of revenues over expenses, (2) “a right in
the soil of another”
63
Problem 10.4, page 180
Billie gave a SI in “inventory.”
Firstbank
“Inventory”
Billie
64
Problem 10.4, page 180
Billie gave a SI in “inventory.” Billie is selling everything but
the inventory to Joey.
Firstbank
“Inventory”
Billie
Leasehold
Furniture
Fixtures
Equipment
Goodwill
Accounts
Trademarks
Joey
65
Problem 10.4, page 180
Billie gave a SI in “inventory.” Billie is selling everything but
the inventory to Joey. We represent Joey. Is the security
interest in inventory of concern?
Firstbank
“Inventory”
Billie
Leasehold
Furniture
Fixtures
Equipment
Goodwill
Accounts
Trademarks
Joey
66
Problem 10.4, page 180
Billie gave a SI in “inventory.” Billie is selling everything but
the inventory to Joey. We represent Joey. Is the security
interest in inventory of concern?
Could Firstbank have
a security interest in
Firstthe accounts?
bank
Leasehold
Furniture
“Inventory”
Fixtures
Equipment
Billie
Joey
Goodwill
Accounts
Trademarks
67
Problem 10.4, page 180
Billie gave a SI in “inventory.” Billie is selling everything but
the inventory to Joey. We represent Joey. Is the security
interest in inventory of concern?
Could Firstbank have
a security interest in
Firstthe accounts?
bank
Leasehold
Furniture
Other items?
“Inventory”
Fixtures
Equipment
Billie
Joey
Goodwill
Accounts
Trademarks
68
Problem 10.4, page 180
Billie gave a SI in “inventory.” Billie is selling everything but
the inventory to Joey. We represent Joey. Is the security
interest in inventory of concern?
Could Firstbank have
a security interest in
Firstthe accounts?
bank
Leasehold
Furniture
Other items?
“Inventory”
Fixtures
Equipment
Billie
Joey
Goodwill
Accounts
Trademarks
In re Shirel, page 154. “No reasonable third party would
understand that a security interest was created in the refrigerator
69
by merely looking to the description itself.”
Problem 10.5, page 180
XT-100
Copier
#XEX30
ELP lends Golan $35K secured by XT-100.
70
Problem 10.5, page 180
XT-100
Copier
#XEX30
Insurance
payable
ELP lends Golan $35K secured by XT-100.
a. Fire destroys copier. Loss insured. What is ELP’s collateral?
71
Problem 10.5, page 180
XT-100
Copier
#XEX30
Insurance
payable
Check
Bank
account
ELP lends Golan $35K secured by XT-100.
a. Fire destroys copier. Loss insured. What is ELP’s collateral?
b. Insuror pays. Golan deposits. What is ELP’s collateral?
Start
Insurance
Deposits Withdrawals Balance
$5,000
$35,000
$40,000
72
Problem 10.5, page 180
XT-100
Copier
#XEX30
Insurance
payable
Check
Bank
account
Check
to rent
ELP lends Golan $35K secured by XT-100.
a. Fire destroys copier. Loss insured. What is ELP’s collateral?
b. Insuror pays. Golan deposits. What is ELP’s collateral?
c. Golan writes check for rental. What is ELP’s collateral?
Start
Insurance
Rent check
Deposits Withdrawals Balance
$5,000
$35,000
$40,000
$2,000
$38,000
73
Problem 10.5, page 180
XT-100
Copier
#XEX30
Insurance
payable
Check
Bank
account
ELP lends Golan $35K secured by XT-100.
Check
to rent
Check
to IRS
a. Fire destroys copier. Loss insured. What is ELP’s collateral?
b. Insuror pays. Golan deposits. What is ELP’s collateral?
c. Golan writes check for rental. What is ELP’s collateral?
Start
Insurance
Rent check
Next check
Deposits Withdrawals Balance
$5,000
$35,000
$40,000
$2,000
$32,000
$38,000
$6,000
d. Golan writes
check to IRS.
What is ELP’s
collateral?
74
Problem 10.6, page 180
XT-100
Copier
#XEX30
Insurance
payable
Check
Bank
account
Check
to rent
New
copier
Golan writes check for new copier. What is ELP’s collateral?
Start
Insurance
Rent check
Next check
Deposits Withdrawals Balance
$5,000
$35,000
$40,000
$2,000
$32,000
$38,000
$6,000
§9-332(b)
75
Problem 10.6, page 180
XT-100
Copier
#XEX30
Insurance
payable
Check
Bank
account
Check
to rent
New
copier
Golan writes check for new copier. What is ELP’s collateral?
Start
Insurance
Rent check
Next check
Deposits Withdrawals Balance
$5,000
$35,000
$40,000
$2,000
$32,000
$38,000
$6,000
§9-332(b)
76
Problem 10.6, page 180
XT-100
Copier
#XEX30
Insurance
payable
Check
Bank
account
Check
to rent
New
copier
Golan writes check for new copier. What is ELP’s collateral?
$6,000 and probably the new copier.
Start
Insurance
Rent check
Next check
Deposits Withdrawals Balance
$5,000
$35,000
$40,000
$2,000
$32,000
$38,000
$6,000
77
Three Possible Results
• $29,000 of the check was our proceeds.
– But it would create a security interest for an
amount less than the value of the collateral and
less than the amount of the debt. Unusual
• Only the $6,000 in the bank account remains
identifiable.
– The remainder of the money loses its
"identifiability" when it is commingled in the
check with non-proceeds money.
• The new XT-100 is our collateral
– Value of our collateral expands
Download
Related flashcards
Create Flashcards