Secured creditors

Question 0

Purchase money security interest

Answer 0

1) Seller who sold the goods (collateral) to the debtor on credit and buyer granted seller a SI in the goods (CLTL);
OR
2) Creditor that lent the money to the buyer to enable him to buy the collateral if the money is in fact so used and B granted C a SI in the goods (CLTL)

PMSI in consumer goods = born perfected (perfection upon attachment)

Other ways to perfect: 1) filing a finance statement 2) creditor taking pzn of the goods

Question 1

Unsecured creditors

Answer 1

A valid security interest is required

SI

Question 2

Perfected security interest

Answer 2

Only those who have perfected their security interest

PSI

Question 3

Perfected purchase money security interest

Answer 3

PPMSI

Question 4

Sppmsi

Answer 4

SPPMSI

Question 5

Value

Answer 5

A binding commitment to extend credit or the extension of immediately available credit whether drawn upon or not.

Question 6

Authentication

Answer 6

Means the debtor signed or executed a security agreement.

Doesn’t have to be full signature, can be a symbol as long as the authenticating person has the present intent to adopt or accept a record.

Not necessary to authenticate if the creditor has possession or control of the collateral.

Question 7

Security agreement

Answer 7

-Must provide a description that reasonably identifies the collateral.
(reasonably identifies if the SA describes the collateral by specific listing, category, or type defined in UCC / supergeneric description not sufficient)

-Doesn’t have to be in specific form (except for description of collateral)

Question 8

Hereafter Acquired Clause

Answer 8

Allows parties to create a SI that can attach both to existing personal property and hereafter acquired personal ppty of debtor

Aka “floating lien” - SI has nothing to attach to at moment of creation; SI floats until the D has acquired rights in the collateral when it attaches automatically to the collateral.

Question 9

SI

Answer 9

SI = V + R + Ad/PC/CC

SI includes HAC and/or PMSI

Question 10

Ways to Perfect

Answer 10

1) Possession

Question 11

Possession

Answer 11

• Creditor must possess or do it through a 3P
• A secured party can satisfy pzn requirement if the 3P authenticates a record acknowledging that it holds pzn of the collateral for the secured party’s benefit either before or after the person takes possession of the collateral.
  * doesn’t apply if collateral is certificated securities and goods covered by a document

Question 12

What collateral can be Possessed

Answer 12

1) Negotiable Documents
2) Goods
3) Instruments*
4) Money*
5) Tangible chattel paper
6) Certificated securities

*can only be perfected by possession

Question 13

Temporary Perction

Answer 13

A SI in certificated securities, negotiable documents, or instruments is perfected for 20 days from attachment if creditor gives new value under an authenticated security agreement.

Question 14

Automatic Perfection

Answer 14

I. PMSI in consumer goods (no cars; subject to cert. of title statutes)

II. Insignificant assignment of accounts or payment intangibles

III. Sale of a payment intangible or promissory note

AP = [PMSI (C)] + [Insig. Assgn. A/PI] + [S of PI & PN]

Question 15

What to file?

Answer 15

1) Financing statement

2) Amendments
- for subsequent changes, amendments, or continuation statements

Question 16

Financing Statement

Answer 16

• must be authorized by the debtor to be effective
• debtor automatically authorizes the filing of an initial FS by authenticating or becoming bound by a SA
• FS doesn’t have to be signed by anyone

Must have:

1) Debtor’s name
2) Secured party’s name
3) Description of the collateral (supergeneric ok)

• 4 months (name change)
• 5 years (continuation statement)

Question 17

Where to file?

Answer 17

If Q about perfection of SI, then the GR is:

• The law of the jurisdiction where the debtor is located determines the perfection of SIs

Question 18

Location of debtor

Answer 18

1) registered entities located in state of organization
2) non-registered entities located in state of chief executive office
3) Individuals located in state of principal residence
4) federally registered companies in the state federal law designates, if any, or in the state the fed. org. designates if authorized by fed law
5) foreign debtors located in D.C.

Question 19

Exceptions to GR of debtor location as place to file

Answer 19

The law of the jurisdiction where the collateral is located governs the perfection issue in these situations:

1) Possessory security interest
2) Certificated securities
3) Fixture filings
4) Timber to be cut filings
5) As-extracted Collateral filings
6) Agricultural liens

Question 20

(If question 2)

What is effect of perfection? Or which creditor gets collateral?

Answer 20

Law of jurisdiction where debtor is located governs the following situations: general intangible and quasi-tangible property

1 Possessory SI
2 Tangible negotiable documents
3 Goods
4 Instruments
5 Tangible chattel paper
6 Money
7 Certificated securities
8 Fixtures
9 Timber
10 Agricultural liens 
11 As Extracted Mineral

Question 21

Goods under certificate of title statutes

Answer 21

The local law of the jurisdiction under whose certificate of title the goods are covered governs perfection, the effect of perfection or non perfection, and the priority of a SI in goods covered by a certificate of title

Question 22

Which state law governs?

Answer 22

Perfection = Debtor’s location ( except location of collateral if PCFTAA)

Priority = Debtor’s location if GI and QT;
location of collateral if PTGITMCFTAA