SECURED TRANSACTIONS ROADMAP Introductory Note: At the beginning of any problem, be sure that you can identify the following: The debtor; The secured creditor; The underlying obligation; and The collateral INTRODUCTORY PROVISIONS: SCOPE & BASIC DEFINITIONS UCC Provision Title Use UCC 9-109 Scope of Article 9 At the beginning of any question, be sure to establish that the transaction falls within Article 9. Looks at the substance of the transaction, rather than the what the parties call the relationship/transaction. If the arrangement is a secured transaction, then they must have gone through all the steps of attachment and perfection. UCC 1-201(b)(37) Definition of Security Interest UCC 9-102(a)(12) Definition of Collateral UCC 9-102(a)(72)(A) Definition of Secured Party UCC 9-102(a)(28) Definition of a Debtor UCC 9-109(a)(44) Definition of Goods UCC 9-102(a)(5) Agricultural Lien Introductory Note: At times, a document may be titled a “lease” but may actually be intended as a security interest. Be sure to establish that although the document is labeled a “lease” it is in fact a security interest. UCC Provision UCC 1-203 Title Lease Distinguished from Security Interest Use Factors that indicate a security interest (i.e. a sale): You cannot terminate the lease; the debtor receives the collateral for nominal consideration; original term of the lease is equal to the remaining economic life of the lease (looks like a purchase). 1
Introductory Note: The first step for determining whether a security interest exists is to determine whether the security interest attaches to the collateral. UCC Provision UCC 9-203(a) UCC 9-203(b) UCC 9-102(a)(69) ATTACHMENT Title Attachment Enforceability Defines a “record” Use Defines when a security interest attaches to collateral. Establishes the elements for attachment. This is helpful when the security agreement was created through an electronic medium. Comment 9 – establishes that authenticate encompasses all records, not just writings. Among the elements for attachment, is the requirement, under 9203(b)(3)(A) that the security agreement provide a description of the collateral. 9-108 tells us what constitutes a sufficient description. Discusses attachment to after-acquired property – specifically, it tells when a security agreement WILL NOT attach to after acquired property.
UCC 9-102(a)(7)
Defines Authenticate
UCC 9-108
Sufficiency of Description
UCC 9-204
After-Acquired Property
Introductory Note: When discussing the element of perfection, go through the following steps to determine what must be done to perfect that specific type of collateral: First, classify the collateral as either a “good” or an “general intangible.” Next, if the collateral is a “good,” then it must fit within one of the following four categories: o Consumer goods o Farm Products o Inventory o Equipment
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PART 1 OF PERFECTION: CLASSIFY THE COLLATEAL UCC Provision Title Use UCC 9-102(a)(44) Goods This is one of the major categories of collateral. It must first be classified as either a “good” or a “general intangible.” UCC 9-102(a)(23) Consumer Goods If the collateral is a good, then it must be classified into one of four categories: (1) consumer goods; (2) farm products; (3) inventory; or (4) equipment. If the collateral is a good, then it must be classified into one of four categories: (1) consumer goods; (2) farm products; (3) inventory; or (4) equipment. If the collateral is a good, then it must be classified into one of four categories: (1) consumer goods; (2) farm products; (3) inventory; or (4) equipment. This is a special type of collateral with its own category. This is a special type of collateral with its own category. This is a special type of collateral with its own category. This is a special type of collateral with its own category. This is a special type of collateral with its own category. This is one of the major categories of collateral. It must first be classified as either a “good” or a “general intangible.” 3
UCC 9-102(a)(34)
Inventory
UCC 9-102(a)(33)
Equipment
UCC 9-102(a)(30) UCC 9-102(a)(47) UCC 9-102(a)(11) UCC 9-102(a)(49) UCC 9-102(a)(29)
Document Instrument Chattel Paper Investment Property Deposit Account THE INTANGIBLES General Intangible
UCC 9-102(a)(42)
UCC 9-102(a)(2)
Account
Introductory Note: Once you have classified the collateral, then you have to establish the method of perfection. The method of perfection often depends on the type of collateral that you have. There are generally four different ways to perfect a security interest: Filing Possession Control Automatic Perfection PART 2 OF PERFECTION: METHOD OF PERFECTION PERFECTION BY FILING UCC Provision Title Use UCC 9-310 Filing to Perfect a Security This section provides the Interest general rule in order to perfect an interest, the secured creditor must file a financing statement. It also provides when filing of a financing statement is not necessary for perfection – this is basically where the secured creditor uses some other method of perfection (possession, control or automatic perfection. UCC 9-516 What constitutes a filing This provides what has to happen for a valid financing statement; it also state what will not constitute a filing; and refusal to accept the record. UCC 9-517 Effect of Indexing Errors Describes what happens when the filing office makes a mistake. UCC 9-502 Contents & Time of Filing Provides what the financing the Financing Statement statement must contain; also establishes that a financing statement may be filed before a security agreement is made/attachment occurs. UCC 9-503 Name of the Debtor Describes how the name of the debtor must be stated in the financing statement UCC 9-504 Indication of the Collateral Provides how the Collateral Must be Described in the 4
UCC 9-520
Acceptance and Refusal to Accept a Record
UCC 9-521 UCC 9-523 UCC 9-506 UCC 9-509
UCC Financing Statement Form Acknowledgment of Filing the Financing Statement Effect of Errors/Omissions in the Financing Statement Persons Entitled to File a Record Filing Office Law Governing Perfection and Priority of Security Interests Location of the Debtor
UCC 9-501 UCC 9-301 UCC 9-307
financing statement. Describes when a financing statement must be refused, how the secured creditor will receive notice that the statement has been refused, and when the filing will be effective. If this form is used and is properly filled out, the form cannot be refused. The secured creditor may request an acknowledgment from the filing office. What constitutes a seriously misleading financing statement. Describes circumstances when a secured party is authorized by the debtor to file a financing statement. Where the filing office is to be located.
Introductory Note: Under certain circumstances, perfection may be established by possession of the collateral and under other circumstances, perfection by possession is required. Money Negotiable Documents Goods Instruments Tangible Chattel Paper PART 3 OF PERFECTION: PERFECTION BY POSSESSION UCC Provision Title Use UCC 9-312(b)(3) Perfection of Security Perfection in money as Interests . . . In Money collateral can be perfected only by possession of the money. UCC 9-313 When Possession by or Negotiable Documents, Delivery To Secured Party Goods, Instruments, Money, Perfects Without Filing Tangible Chattel Paper,
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Certificated Securities by taking delivery of the certificate. Note: 9-313(h). Introductory Note: The UCC allows automatic perfection upon attachment for Purchase-Money Security Interests in Consumer Goods (Remember, the PMSI must be for consumer goods only). Therefore, the analysis should cover the following steps: Make sure the collateral is a consumer goods (this is determined by the debtor’s use of the collateral) Make sure the transaction is a purchase-money security interest Advice your client to file anyway – there is no punishment for using more than one method of perfection, as long as the method is allowed. PART 4 OF PERFECTION: AUTOMATIC PERFECTION IN PMSI FOR CONSUMER GOODS UCC Provision Title Use UCC 9-102(a)(23) Definition of Consumer Establishes the first step in Goods the analysis: making sure the collateral is consumer goods – determined by the debtor’s use of the collateral. UCC 9-103 Definition of PMSI Establishes the second step in the analysis: making sure that the transaction is PMSI UCC 9-309(1) Security Interest Perfected Provides that a PMSI in Upon Attachment consumer goods is perfected upon attachment. OTHER INSTANCES OF AUTOMATIC PERFECTION: SECURITY INTERESTS, INVESTMENT PROPERTY & DEPOSIT ACCOUNTS UCC 9-309(2) – (14) Security Interest Perfected Subsection 2-14 provide the Upon Attachment other instances of automatic perfection upon attachment. Subsection 10 provides for automatic perfection for investment property Introductory Note: Some types of collateral can only be perfected by the secured party’s control over the collateral. Deposit Accounts Letter of Credit Investment property Electronic Chattel Paper
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Note: Even if a secured creditor perfect by filing, that secured creditor may lose priority if another creditor perfects through control. Therefore, advise your client to perfect through both methods.
PART 5 OF PERFECTION: PERFECTION BY CONTROL UCC Provision Title Use UCC 9-314 Perfection by Control Establishes which types of property may be perfected by the secured party’s control over the collateral. UCC 9-312(b) Control of Certain Collateral UCC 9-104 & comments Control of Deposit Accounts Requirements for control following over a deposit account UCC 9-105 Control of Electronic Chattel Requirements for control Paper over electronic chattel paper UCC 9-106 Control over Investment Requirements for Control Property over Investment Property UCC 9-107 Control over Letter-ofRequirements for control Credit Rights over Letter-of-Credit Rights UCC 8-106 Control over certificated Manners to exert control securities over certificated securities Introductory Note: Sometimes a change in the circumstances between a debtor and a secured creditor may require a continuation of the financing statement to be filed in order for the secured creditor to maintain his priority status and avoid a lapse of the financing statement. Such circumstances include: Passage of time – financing statements lapse after a period of 5 years. Addition/Deletion of Collateral – requires an amendment Changes in the Situation: o Relocation of the Debtor o Changes in the Debtor’s name o Transfer of the collateral to a person who thereby becomes a debtor (i.e. the original debtor transfers to a new debtor) If both the original and new debtor are from the same state, no new filing is required. If the original and new debtor are from different states, then 1 year is allowed for a new filing o Transfer of collateral to a “new debtor” Termination of the financing statement (i.e. due to fulfillment of the underlying obligation) CHANGE IN CIRCUMSTANCES REQUIRING A CHANGE TO THE FINANCING STATEMENT UCC Provision Title Use UCC 9-515(a) Duration and Effectiveness 5-year Effectiveness; lapse; of Financing Statement continuation of financing
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statement UCC 9-512 Amendment of Financing What needs to be in an Statement amendment (note the difference between the alternatives); Period of Effectiveness; Ineffectiveness of Amendments CHANGES IN THE DEBTOR’S SITUATION UCC Provision Title Use UCC 9-316(a)(2) Continued Perfection of Relocation of the Debtor – Security Interest financing statement expires 4 months after a change in the debtor’s location to another jurisdiction. UCC 9-507(c) Effect of Certain Events on Change in the name of the Effectiveness of Financing debtor – 4 months to make Statement an amendment to the financing statement (note: the name change must be seriously misleading) UCC 9-507(a) Transfer of the Collateral to If both are from the same a Person who Thereby state, no new filing is Becomes a Debtor (original required. debtor transfers to a different debtor) UCC 9-316(a) Transfer of the Collateral to If both are from different a Person who Thereby states, the UCC allows 1 year Becomes a Debtor (original for an amendment to be filed debtor transfers to a in order for the filing to different debtor) relate back to the original date of perfection. UCC 9-102(a)(56) Definition of “New Debtor” Definition of “New Debtor” UCC 9-203(d) When a Person Becomes When another person Bound by Another Person’s becomes bound; effect of the Security Agreement new debtor becoming bound. UCC 9-508(b); & Comment Effectiveness of Financing If the debtors are in the same 4 Statement if New Debtor state, then the change is Becomes Bound by Security simply treated like a name Agreement change (4 months to file an amendment) TERMINATION OF THE FINANCING STATEMENT UCC Provision Title Use UCC 9-513 Termination Statement Generally, secured creditors are under no duty to file a termination upon fulfillment 8
of the underlying obligation. However, if the underlying obligation is consumer goods, the burden is on the secured creditor to file a termination; in other cases, when the debtor makes the demand after fulfillment of the obligation, the secured party has 20 days to [respond]
Note: The next step after determining perfection, is to determine who has priority where two or more creditors assert valid security interests in the same collateral. The analysis should be as follows: First, be perfectly clear about exactly what piece(s) of personal property the characters are fighting over. Second, sort out the individual players: those who have or who assert they have some interest in that property. Then apply the basic rules for priority. PRIORITY: THE BASIC RULES UCC Provision Title Use UCC 9-317, especially (a) Interests That Take Priority Shows instances where Over or Take Free of security interests may be Security Interests or subordinate to other interests Agricultural Liens UCC 9-102(a)(52) Definition of Lien Creditor A lien creditor (such as the trustee in bankruptcy) make take priority over the secured creditor UCC 9-322(a), Comment 4 – Priorities Among Conflicting General Priority Rules Example 1 Security Interests in and Agricultural Liens on Same Collateral UCC 9-308, Comment 2 Deals with when a financing statement is filed before attachment. UCC 9-204(c), Comments 5 Future Advances & Other There is no need to refer to &7 Value “after-acquired property” or “future advances” in a financing statement. UCC 9-333 Priority of Certain Liens The general rule is that a 9
Arising by Operation of Law: Possessory Lien UCC 9-322(g) and Comment 12 Priority of Agricultural Lien
mechanic’s lien has priority over a security interest – however, the mechanic’s lien only lasts during possession. Agricultural liens have priority over security interests if the statute creating the agricultural lien so provides.
Note: The basic rules do not apply to priority with respect to a PMSI. PMSI secured creditors are afforded special priority and have the potential to jump ahead of everyone in certain situations. UCC Provision UCC 9-103 UCC 9-317 UCC 9-324(a) & (g), Comments 3, 4, 13 PRIORITY & THE PMSI Title Purchase Money Security Interests Priority of PMSI Priority of PMSI Use Establishing that the transaction is a PMSI Rules of Priority of a PMSI Priority of PMSI
Note: Fixtures Goods qualify as fixtures based on their relationship to a specific piece of real estate. Fixtures might be simultaneously subject to an Article 9 security interest and to rightful claims made by the real property financer, the mortgagee. o Example: seats in a theater o Residential Examples: water heater, wall-to-wall carpeting, boilers, large appliances, and rose bushes o You should always advise your client to perfect in both of the two following ways: Make a fixture filing; and Make a regular filing (in case a court finds the item to not be a fixture) General Rule: One who buys outright a piece of real property gets all – including the fixtures attached to the property unless a contrary agreement is made. CREATES OF A SECURITY INTEREST IN FIXTURES UCC Provision Title Use UCC 9-102(a)(41) Definition of Fixtures Definition of fixtures UCC 9-334 & Comment 3 Priority interest in fixtures Priority interest in fixtures PERFECTION OF A SECURITY INTEREST IN FIXTURES UCC Provision Title Use
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UCC 9-102(a)(40) UCC 9-502(a) and (b) and Comment 5 UCC 9-501(a)(1)(B) UCC Provision UCC 9-334 & Comment 2
Definition of a fixture filing Fixture Filing Requirements Filing office of a Fixture Filing PRIORITIES IN FIXTURES Title Priorities in Fixture Filing
Definition of a fixture filing Fixture Filing Requirements Filing office of a Fixture Filing Use Note: These rules apply only when one disputant is claiming an Article 9 security interest and the other is claiming its interest through the applicable local law of real property.
Note: In what ways does a security interest cease to exist? General Rule: The sale or other transfer of a bit of property will not do anything to affect the interest, which will, as a general rule, go along for the ride. UCC 9-201(a) & 9-315(a) and comment 2. o Exception: The buyer who gives up something for the collateral may reasonably expect to take it free and clear of all encumbrances. If the secured party fails to perfect, then the transferee can take free of the security interest. There are also other ways in which the buyer of goods (and notice only that class of collateral) can take free and clear of even a perfected interest. One way is for the debtor to satisfy the underlying obligation o If the secured creditor is in possession of the collateral, the debtor needs to regain possession o If the secured creditor perfecting by filing, then a termination statement needs to be filed. UCC 9-513 o Secured party may allow release of the security interest in the collateral. o In certain instances, where the debtor sells or otherwise transfers into the hands of a new owner “free of” or “unencumbered by” a security interest that had prior to the transfer been attached to it. TERMINATION OF S.I. & TRANSFER OF COLLATERAL TO A PURCHASER UCC Provision Title Use UCC 9-513 Termination statement Termination statement UCC 9-201(a) States general rule with States general rule with regard to transfer regard to transfer UCC 9-315(a) & Comment 2 States general rule with States general rule with regard to transfer regard to transfer UCC 9-317(b) Effect of Failure to Perfect Effect of Failure to perfect
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UCC 9-320(a) and (b) UCC 1-201(b)(9)
Other instances where the buyer takes free and clear of the security interest Buyer in the Ordinary Course
Other instances where the buyer takes free and clear of the security interest Buyer in the Ordinary Course
Note: Proceeds Remember, that proceeds of proceeds are proceeds. The secured creditor must carefully watch the proceeds of collateral once the debtor disposes of the proceeds. Once collateral is disposed, there is an automatic 20-day period of perfection on proceeds. No new action by the secured creditor is required in order to perfect after the 20-day lapse period if the proceeds are identifiable cash proceeds. For non-cash proceeds, at the end of the 20-day automatic perfection period, the secured creditor will need to perfect on the non-cash proceeds in order to retain a security interest in the non-cash proceeds. o Note, however, that 9-315(d) provides exceptions where the security interest will continue in non-cash proceeds despite the secured creditor’s failure to take further action to perfect. o The test on whether the secured creditor will be required to take further acts for perfection in non-cash proceeds depends on whether the place of filing of the financing statement for the proceeds is the same place where the original collateral is properly filed. If so, then no new filing is required. If not, ten the secured creditor needs to file to perfect in the appropriate filing office. PROCEEDS UCC Provision UCC 9-315 Title Secured Party’s Rights on Disposition of Collateral and in Proceeds Definition of proceeds Proceeds and Supporting Obligations Use This provides the general rule that the secured party retains a security interest in the collateral upon its disposition by the debtor. Definition of proceeds The attachment of proceeds This provides the exception that money due under an insurance policy may constitute proceeds. Instrument purchaser’s priority Remember that whether the secured creditor will be
UCC 9-102(a)(64) UCC 9-203(f) UCC 9-109(d)(8)
UCC 9-330(d) UCC 9-501
Instrument purchaser’s priority Filing Office
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UCC 9-322(b)(1)
Time of perfection: proceeds and supporting obligations Transfer of Money: Transfer of Funds from Deposit Account Priority with respect to chattel paper
UCC 9-322 UCC 9-330(a)-(c)
required to take additional steps for perfection of noncash proceeds depends on whether the filing office is the same for the original collateral as it would be for the proceeds. If so, then no new filing is required; if not, then the secured creditor has a 20-day window within which to perfect. This gives the priority when two secured creditors have security interests in the same collateral. Transfer of Money: Transfer of Funds from Deposit Account Priority with respect to chattel paper
PRIORITIES IN CHATTEL PAPER AND ACCOUNT FINANCING UCC Provision Title Use UCC 9-102(a)(2) Definition of Accounts Definition of Accounts UCC 9-102(a)(11) Definition of Chattel Paper Definition of Chattel Paper UCC 9-102(a)(47) Definition of Instruments Definition of Instruments UCC 9-330(a)-(c) Special Rules Affecting Special Rules Affecting Those who Deal in Chattel Those who Deal in Chattel Paper Paper Rules for determining priority in investment property and deposit accounts Notes: Remember that deposit accounts can only be perfected by control o But as a practical matter, you need to still advise your client to perfect by filing. o Perfection by filing in investment property is permissible and it works, only if no other party takes control. PRIORITIES IN INVESTMENT PROPERTY AND DEPOSIT ACCOUNTS UCC Provision Title Use UCC 9-328 Rules for determining Rules for determining priority in investment priority in investment property and deposit property and deposit accounts accounts 13
UCC 9-327 UCC 9-108 UCC 8-106
Priority of Security Interests in Deposit Accounts Sufficiency of Description Control of a certificated security
Priority of Security Interests in Deposit Accounts Sufficiency of Description Control of a certificated security
Notes: Default by the debtor triggers the whole scheme of a secured party’s rights and remedies. The parties’ agreement will determine what constitutes default (9-601(a)(43) Remember that all contracts and duties are subject to good faith. Acceleration clauses are valid but are subject to good faith. Notice – usually the repossession process is one where the debtor has been habitually late or is seriously behind in payments, and that is the kind of thing of which the debtor cannot reasonably claim to be unaware or of which it needs a right to notice The other option for the secured party besides repossession is reducing the claim to judgment, and thereby become a lien creditor. The secured party’s rights and responsibilities in taking possession are subject to breach of peace, but the secured party can use the local sheriff DEFAULT AND ENFORCEMENT Title Use Default triggers the secured Default triggers the secured party’s enforcement party’s enforcement Definition of good faith Definition of good faith
UCC Provision UCC 9-601(a) UCC 9-102(a)(43) & comment 1 UCC 9-601(a)(1)
Secured party becoming a Secured party becoming a judgment/lien creditor judgment/lien creditor UCC 9-609 & comment 3 Rights & responsibilities of Rights and responsibilities of secured creditor secured creditor UCC 9-625 Secured party’s failure to Secured party’s failure to comply with Article 9 comply with Article 9 UCC 9-626 Secured party’s failure to Secured party’s failure to comply with Article 9 comply with Article 9 UCC 9-627 Secured party’s failure to Secured party’s failure to comply with Article 9 comply with Article 9 THE EVENT OF DEFAULT & THE PROCESS OF RESPOSSESSION UCC Provision Title Use UCC 9-609 Rights & Responsibilities of Rights & Responsibilities of the Secured Creditor the Secured Creditor UCC 9-615(a)(1) Reasonable expenses of Reasonable expenses of retaking the goods will be retaking the goods will be assessed against the debtor assessed against the debtor UCC 9-601(a)(1) The secured party has the The secured party has the 14
UCC 9-610(a) UCC 9-615(a) UCC 9-625(a)
UCC 9-627
UCC 9-611
option of reducing her claim to judgment Secured party has wide latitude in what it may do following debtor’s default Application of proceeds following the sale of the collateral Debtor’s right to go to court when secured party fails to proceeds in accordance with Article 9 Just because the sale dos not result in the absolute best price does not mean that the secured creditor failed to proceed in a commercially reasonable manner Type of notice to be given to the debtor (and certain other parties) about any proposed disposition of the collateral Type of notice to be given to the debtor (and certain other parties) about any proposed disposition of the collateral Content/Form of the notice
UCC 9-612
option of reducing her claim to judgment Secured party has wide latitude in what it may do following debtor’s default Application of proceeds following the sale of the collateral Debtor’s right to go to court when secured party fails to proceeds in accordance with Article 9 Just because the sale dos not result in the absolute best price does not mean that the secured creditor failed to proceed in a commercially reasonable manner Must send the notice to persons specified in subsection (a) a reasonably authenticated notification of disposition. Timeliness of the notice of disposition What the secured party must do to satisfy the requirement when the context is other than a consumer-goods transaction Special case of a consumer goods transaction Secured party sometimes lacks incentive to maximize the proceeds Debtor has the right to get a court order ordering a disposition if the secured party is not proceeding in accordance with Article 9 “Rebuttable Presumption Rule” – the collateral was worth, at the time of sale, and thus sold for, an amount equal to the outstanding debt
UCC 9-613
UCC 9-614 UCC 9-615(f) & Comment 6 UCC 9-625
Content/Form of the notice Secured party sometimes lacks incentive to maximize the proceeds Debtor has the right to get a court order ordering a disposition if the secured party is not proceeding in accordance with Article 9 “Rebuttable Presumption Rule” – the collateral was worth, at the time of sale, and thus sold for, an amount equal to the outstanding debt
UCC 9-626 & Comment 2
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owed by the debtor to the secured party at the time of default. Note: The secured party must then show that the collateral was worth less than the debt and by what measure it is to collect any deficiency. UCC 9-626(b) & Comment 4 Courts can determine the proper rules in consumer transactions. UCC 9-602(5) The secured party’s right to a surplus under 9-615(d)(2) cannot be waived or varied. UCC 9-617 Rights of Transferee of Collateral UCC 9-624(3)(b) and (4) & Waiver of debtor’s right to (c) notice of disposition
owed by the debtor to the secured party at the time of default. Note: The secured party must then show that the collateral was worth less than the debt and by what measure it is to collect any deficiency. Courts can determine the proper rules in consumer transactions. The secured party’s right to a surplus under 9-615(d)(2) cannot be waived or varied. Rights of Transferee of Collateral Waiver of debtor’s right to notice of disposition of the collateral STRICT FORECLOSURE & THE RIGHT OF REDEMPTION UCC Provision Title Use UCC 9-620 The secured party may retain the collateral in full or partial satisfaction of the obligation is secured. (i.e. “strict foreclosure”); note that the secured party must get the debtor’s consent to its retention of the collateral in full or partial satisfaction of what is owed. Subsection (c) deals with what constitutes consent. UCC 9-623 [see examples 6 Debtor’s right to redeem the and 7]; & Comment 2 collateral UCC 9-621 Effect of Secured Party’s Effect of Secured Party’s Acceptance of Collateral in Acceptance of Collateral in full or partial satisfaction full or partial satisfaction UCC 9-625(a) If a secured party is not If a secured party is not proceeding in accordance proceeding in accordance with the provisions of this with the provisions of this article, a court may order article, a court may order disposition of collateral on disposition of collateral on appropriate terms and appropriate terms and conditions. conditions.
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BANKRUPTCY UCC Provision 11 USC § 541(a) Title Property of the estate Use Once the debtor files for bankruptcy, a trustee is appointed, and the bankruptcy estate is created. This section provides what items will be included in the bankruptcy estate. Second, as soon as the debtor files a petition for bankruptcy, an automatic stay is imposed against all collection efforts by creditors. Under certain circumstances, the debtor may petition the court for relief from the automatic stay. Among the grounds for lifting the stay is where the secured party’s interest is not adequately protected. This section provides means by which a secured party could be adequately protected. Among the property of the estate is “proceeds, product, offspring, rents, or profits of or from property of the estate, except such as are earnings from services performed by an individual debtor after the commencement of the case.” Post-petition effect of security interest Filing of proofs of claims or interests A claim filed under § 501 is deemed allowed unless there is an objection to the claim. Determination of secured status Bifurcation of the claim Determining the reasonable value of the collateral for
11 USC § 362(a)
The Automatic Stay
11 USC § 362(d)
Relief from the Automatic Stay Adequate Protection
11 USC § 361
11 USC § 541(a)(6)
Property of the Estate
11 USC § 552(a) 11 USC § 501 11 USC § 502 11 USC § 506 11 USC § 506(a)(1) 11 USC § 506(a)(2)
Post-petition effect of security interest Filing of proofs of claims or interests Allowance of claims or interests Determination of secured status Bifurcation of the claim Determining the reasonable value of the collateral for
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bifurcation purposes bifurcation purposes 11 USC § 522, (b) & (d) Exemptions Exemptions 11 USC § 522(f)(1) Exemptions Exemptions 11 USC § 524 Effect of Discharge Effect of Discharge 11 USC § 525 Protection against Protection against discriminatory treatment discriminatory treatment 11 USC § 544 Trustee as a lien creditor and Strong-Arm Powers as successor to certain creditors and purchasers 11 USC § 554 Trustee can abandon the Trustee can abandon the property property 11 USC § 363 Trustee has the power to Trustee has the power to use “use, sale or lease property” sale, or lease property of the of the estate. estate. CHAPTER 11 – REORGANIZATION UCC Provision Title Use 11 USC § 1104 Appointment of trustee or Appointment of trustee or examiner examiner 11 USC § 1129 Confirmation of the plan Confirmation of the plan 11 USC § 1124 Impairment of Impairment of claims or claims/interests interests 11 USC § 1126 Acceptance of plan Acceptance of plan 11 USC § 1123 Contents of plan Contents of plan CHAPTER 13 – ADJUSTMENT OF DEBTS OF AN INDIVIDUAL WITH REGULAR INCOME UCC Provision Title Use 11 USC § 1302 Trustee Trustee 11 USC § 1322 Contents of plan Contents of plan 11 USC § 1324 Confirmation hearing Confirmation hearing 11 USC § 1325(a)(5) & (b) Confirmation of plan Confirmation of plan 11 USC § 1326 Payments Payments
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