Secured Transactions Assignment 18

1. 1 Secured TransactionsAssignment 18 Financing Statements: Other Information

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3. 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. 4 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

5. 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. 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. 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. 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 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

9. 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 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

10. 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 filer ahead of me? Is this my debtor? (False positives)

11. 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 filer ahead of me? Is this my debtor? (False positives) Is this my collateral?

12. 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 filer ahead of me? Is this my debtor? (False positives) Is this my collateral? How do I find the secured creditor to ask?

13. 13 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? Is this my debtor? (False positives) Is this my collateral? How do I find the secured creditor to ask? So financing statement should contain eight more pieces of information

14. 14 What should be in a financing statement: Name of the debtor Name of the secured party 3. Indication of collateral 4. Mailing address of secured party 5. Mailing address of debtor 6. Individual or organization? 7. Type of organization 8. Jurisdiction of organization 9. Organizational ID number

15. 15 What must be in a financing statement:1. To qualify for filing: �9-516(b) Name of the debtor 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? 7. Type of organization 8. Jurisdiction of organization 9. Organizational ID number

16. 16 What must be in a financing statement:1. To qualify for filing: �9-516(b) Name of the debtor 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? 7. Type of organization 8. Jurisdiction of organization 9. Organizational ID number

17. 17 What must be in a financing statement:2. Against reliance purchaser: �9-506(a) Name of the debtor; not seriously misleading, �9-502(a), 9-506(c) 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

18. 18 What must be in a financing statement:2. Against reliance purchaser: �9-506(a) Name of the debtor; not seriously misleading, �9-502(a), 9-506(c) Name of the secured party; can�t seriously mislead but might give rise to an estoppel, �9-506 Comment 2 Indication of collateral; not seriously misleading 4 - 9. The defective filer loses to purchasers who give value in reasonable reliance upon incorrect 9-516(b)(5) information. (Hardly anyone.)

19. 19 What must be in a financing statement:2. Against reliance purchaser: �9-506(a) Name of the debtor; not seriously misleading, �9-502(a), 9-506(c) 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

20. 20 What must be in a financing statement:3. Against bankruptcy trustee �9-506(a) Name of the debtor; not seriously misleading, �9-502(a), 9-506(c) Name of the secured party must be present but need not be right, �9-506 Comment 2 Indication of collateral; not seriously misleading

21. 21 What must be in a financing statement:3. Against bankruptcy trustee �9-506(a) Name of the debtor; not seriously misleading, �9-502(a), 9-506(c) Name of the secured party must be present but need not be right, �9-506 Comment 2 Indication of collateral; not seriously misleading 4 � 9. The defective filer beats lien creditors even if the other six pieces of information are missing or seriously misleading. (Maybe, the totality of information included must not be seriously misleading, �9-506(a).)

22. 22 Terminology Initial financing statement � UCC-1, shown in �9-521(a), text at page 262

23. 23 Terminology Initial financing statement � UCC-1, shown in �9-521(a), text at page 262 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. Amendment: Changes information contained in the financing statement

24. 24 Terminology Initial financing statement � UCC-1, shown in �9-521(a), text at page 262 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. Amendment: Changes information contained in the financing statement Financing statement � The initial financing statement plus all amendments. �9-102(a)(39)

25. 25 Announcement: A Change in the Game As soon as you learn the Game, the Game changes The new Game: Use the Code Find the sections (we give them to you at least once) Apply them to prove the Answer The problems are puzzles; the sections/comments are pieces.

26. 26 Problem 18.1, page 323 You have to file the financing statement now, but don�t know the debtor�s organizational ID number a. Leave the corporate ID number blank? Or fill in the license number of your car? Answer: the SOS will rightfully reject a blank filing, �9-516(b)(5)(C)(iii), but must accept an erroneous filing You fill in the license number and the SOS rejects. Are you perfected? Answer: Yes, �9-516(d). c. What if the SOS accepts? Answer: You are at least lien-perfected. �9-520(c).

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39. 39 Problem 18.5, page 325 Walter�s Department Store wants to file financing statements on thousands of consumer debtor customers.

40. 40 Problem 18.5, page 325 Walter�s Department Store wants to file financing statements on thousands of consumer debtor customers. Does Walter�s need permission?

41. 41 Problem 18.5, page 325 Walter�s Department Store wants to file financing statements on thousands of consumer debtor customers. 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).

42. 42 Problem 18.5, page 325 Walter�s Department Store wants to file financing statements on thousands of consumer debtor customers. 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.

43. 43 Problem 18.5, page 325 Walter�s Department Store wants to file financing statements on thousands of consumer debtor customers. 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. What should Walter�s use as a description of collateral? Problem 9.4.

44. 44 Problem 18.5, page 325 Walter�s Department Store wants to file financing statements on thousands of consumer debtor customers. 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. What should Walter�s use as a description of collateral? Problem 9.4. Same as in the security agreement. �9-509(b), �9-625(e)

45. 45 Problem 18.5, page 325 Walter�s Department Store wants to file financing statements on thousands of consumer debtor customers 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. What should Walter�s use as a description of collateral? Problem 9.4. Same as in the security agreement. �9-509(b), �9-625(e) What if the customer�s receipt is the security agreement?

46. 46 Problem 18.5, page 325 Walter�s Department Store wants to file financing statements on thousands of consumer debtor customers 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. What should Walter�s use as a description of collateral? Problem 9.4. 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?

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54. 54 Problem 18.7: Draft a Financing Statement You are the secured party; I am the debtor. This filing is to perfect the security interest you took in the first written assignment. I am the filing officer; standard search logic is in effect. Deadline is Friday, November 12 at 11:00 pm. Post a pdf to MyHLS, �Financing Statement� bin, or slide hard copy under the door of my office, Areeda 129. Keep a copy. I will print the file you post, and assume that piece of paper alone was delivered to the filing office. I recommend using the UCC-1 official form posted on MyHLS. (But you may not be able to save or email it.) Don�t send filing fees or a formal cover letter. Grading is pass/fail based on effectiveness.

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