The University of Chicago 8/4/2019 Class 7 Secured Transactions, Fall, 2018 Perfection: Secured Party’s Name Randal C. Picker James Parker Hall Distinguished Service Professor of Law The Law School The University of Chicago Copyright © 2001-18 Randal C. Picker. All Rights Reserved.

9-502 (a) [Sufficiency of financing statement.] 8/4/2019 9-502 (a) [Sufficiency of financing statement.] Subject to subsection (b), a financing statement is sufficient only if it: (1) provides the name of the debtor; (2) provides the name of the secured party or a representative of the secured party; and (3) indicates the collateral covered by the financing statement. August 4, 2019

9-503: Name of Secured Party 8/4/2019 9-503: Name of Secured Party (d) [Representative capacity.] Failure to indicate the representative capacity of a secured party or representative of a secured party does not affect the sufficiency of a financing statement. August 4, 2019

9-503: Name of Secured Party 8/4/2019 9-503: Name of Secured Party (e) [Multiple debtors and secured parties.] A financing statement may provide the name of more than one debtor and the name of more than one secured party. August 4, 2019

Copper King Copper King Trust Which SPs are perfected? Noonan 8/4/2019 Copper King Noonan Patterson 1/15/87: Copper King Files Ch 11 $62.5K Which SPs are perfected? PN 1984 2/1/86 $100K Copper King Trust SA: Furn & EQ FS: SPs: Noonan, Patterson $225K in Debt August 4, 2019

Organizing Bank Lending Groups 8/4/2019 Organizing Bank Lending Groups Bank1 Debtor 1/1: SA/FS: All Assets $ Some time later, the Debtor would like to borrow more money. What are the options? August 4, 2019

Lending Groups: Version 1 8/4/2019 TTYN Lending Groups: Version 1 1/1: SA/FS: All Assets, $10K Bank1 Debtor 2/16: SA/FS: All Assets, $10K 1/15: SA, FS: All Assets, $10K Finco Bank2 What are the priorities? August 4, 2019

Answer Priorities Should be Clear Bank1 over Finco over Bank2 August 4, 2019

Lending Groups: Version 2 8/4/2019 TTYN Lending Groups: Version 2 1/1: SA/FS: All Assets, $10K Bank1 Debtor 2/16: Lends $10K 1/15: SA, FS: All Assets, $10K 2/15: Lends $10K Finco Bank2 What are the priorities? August 4, 2019

Answer Priorities Should be Clear Bank2 is a creditor of Bank1, not Debtor Finco and Bank1 are both creditors of Debtor Bank1 has priority over Finco, both for the 1/1 loan and the 2/16 loan See 9-204 on future advances August 4, 2019

3‑5: Secured Creditors and Agents 8/4/2019 TTYN 3‑5: Secured Creditors and Agents Debtor Has either secured creditor perfected? 1/1: $ 1/1: $ 3/1 FS: Holdco Holdco SC SC 2/1 Appointed Collateral Agent August 4, 2019

3-5: Answer See 9-503: Official Comment 3 8/4/2019 3-5: Answer See 9-503: Official Comment 3 Debtor creates a security interest in favor of Bank X, Bank Y, and Bank Z, but not to their representative, the collateral agent (Bank A). The collateral agent is not itself a secured party. See Section 9-102. August 4, 2019

8/4/2019 3-5: Answer Under Sections 9-502(a) and 9-503(d), however, a financing statement is effective if it names as secured party Bank A and not the actual secured parties, even if it omits Bank A’s representative capacity. August 4, 2019

Lending Groups: Version 3 8/4/2019 TTYN Lending Groups: Version 3 1/1: SA/FS: All Assets Agent Debtor 2/15: Lends $ per Agent 1/15: SA, FS: All Assets, $ 1/1: Lends $ per Agent Finco Bank1 Bank2 August 4, 2019 What are the priorities?

Answer Priorities Should be Clear Agent is not a creditor of Debtor Bank1 and Bank2 will be able to claim priority over Finco Bank1 and Bank2 will be at the same priority as to each other August 4, 2019

2001 SA between Oak Rock and IDB Collateral Definition “the following properties, assets and rights of the [Debtor], wherever located, whether now owned or hereafter acquired or arising, and all proceeds and products thereof (all of the same being hereinafter called the ‘Collateral’)”: August 4, 2019

2001 SA between Oak Rock and IDB Collateral Definition “all personal and fixture property of every kind and nature including, without limitation, all goods (including inventory, equipment and any accessions thereto), instruments (including promissory notes), documents, accounts (including healthcare insurance receivables), chattel paper (whether tangible or electronic), August 4, 2019

2001 SA between Oak Rock and IDB Collateral Definition “deposit accounts (whether or not maintained at the Bank), letter-of-credit rights (whether or not the letter of credit is evidenced by a writing), commercial tort claims, financial assets, securities and all other investment property, supporting obligations, any other contract rights or rights to August 4, 2019

2001 SA between Oak Rock and IDB Collateral Definition “the payment of money, insurance claims and proceeds, tort claims and all general intangibles, including, without limitation, all tax refunds, payment intangibles …” August 4, 2019

2001 FS as to Oak Rock in favor of IDB July 31, 2001 Delaware “All of Debtor’s now owned and hereafter acquired assets, including without limitation all accounts, goods, inventory, equipment, instruments, documents, chattel paper, deposit accounts, letter of credit rights, commercial tort claims, financial assets, securities, and all other investment August 4, 2019

2001 FS as to Oak Rock in favor of IDB July 31, 2001 Delaware “property, general intangibles and all supporting obligations and products and proceeds of the foregoing.” August 4, 2019

The Effect of a Filed FS 9-502, Comment 2 “Notice filing has proved to be of great use in financing transactions involving inventory, accounts, and chattel paper, because it obviates the necessity of refiling on each of a series of transactions in a continuing arrangement under which the collateral changes from day to day.” August 4, 2019

The Effect of a Filed FS 9-502, Comment 2 “However, even in the case of filings that do not necessarily involve a series of transactions (e.g., a loan secured by a single item of equipment), a financing statement is effective to encompass transactions under a security agreement not in existence and not contemplated at the time the notice was filed,” August 4, 2019

The Effect of a Filed FS 9-502, Comment 2 “if the indication of collateral in the financing statement is sufficient to cover the collateral concerned.” August 4, 2019

The Effect of a Filed FS 9-502, Comment 2 “Similarly, a financing statement is effective to cover after-acquired property of the type indicated and to perfect with respect to future advances under security agreements,” August 4, 2019

The Effect of a Filed FS 9-502, Comment 2 “regardless of whether after-acquired property or future advances are mentioned in the financing statement and even if not in the contemplation of the parties at the time the financing statement was authorized to be filed.” August 4, 2019

??? (auto perfected sales) 8/4/2019 Oak Rock Financial 2001: SA/FS: All Assets, $ IDB Debtor Agent 2006: UCC Assignment ??? (auto perfected sales) 2006: Lends $ IDB BL 2006: Lends $ Participants What are the priorities? August 4, 2019

Answer The Effect of the Assignment The only real difference here vs. before is the assignment between IDB and Agent IDB August 4, 2019

9-514 on Assignment 9-514(b) Except as otherwise provided in subsection (c), a secured party of record may assign of record all or part of its power to authorize an amendment to a financing statement by filing in the filing office an amendment of the financing statement which: August 4, 2019

9-514 on Assignment 9-514(b) (1) identifies, by its file number, the initial financing statement to which it relates; (2) provides the name of the assignor; and (3) provides the name and mailing address of the assignee. August 4, 2019

9-514 Comments Consequence of Assignment “Upon the filing of an assignment, the assignee becomes the ‘secured party of record’ and may authorize the filing of a continuation statement, termination statement, or other amendment.” August 4, 2019

9-512(c) on Amendments and Adding Collateral A financing statement that is amended by an amendment that adds collateral is effective as to the added collateral only from the date of the filing of the amendment. August 4, 2019

3-6: When Is Agency Determined? 8/4/2019 TTYN 3-6: When Is Agency Determined? Debtor 2/15: SA, FS: EQ $10K Finco 4/15 How split EQ worth $20K? 2/1: $10K SA: EQ, for all debts owed N and HA FS: EQ, SP: Bank 3/5: SA, FS: EQ $10K 4/5: Bank agrees to act as Creditco’s collateral agent Creditco Bank August 4, 2019

Answer Conflict? Compare Oak Rock Financial with Fretz (we haven’t seen this yet) August 4, 2019