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Searching and Filing Under Article 9

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American Bar Association. By. Jennifer Klemp. Norman M. ... MARS does not ignore common variations and abbreviations, typographical errors or misspellings ... – PowerPoint PPT presentation

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Title: Searching and Filing Under Article 9


1
Searching and Filing Under Article 9
  • Presented to
  • The Commercial Financial Services Committee
  • Business Law Section
  • American Bar Association
  • By
  • Jennifer Klemp
  • Norman M. Powell, Esquire
  • Harry C. Sigman, Esquire

2
Introduction
  • Tips On Filing and Searching
  • Were Still In The Transition Phase
  • Electronic Filing Update
  • Getting The Debtors Name Right
  • Conclusions and Practice Tips

3
Tips On Filing And Searching
  • Filling Out The Form
  • Comply with non-uniform, local requirements
  • Law
  • Administrative rules
  • Initial Filings
  • Put debtors name in the correct box
  • 1a for organizations
  • 1b for individuals
  • Put nothing other than or in addition to the
    debtors name in the box

4
Tips On Filing And Searching
  • Filling Out The Form
  • Amendments
  • Must identify, by file number, the initial
    financing statement to which the amendment
    relates
  • Distinguish correction statements
  • Can be filed only by debtor
  • Have no legal effect

5
Tips On Filing And Searching
  • In Lieu Continuations
  • An in lieu is an initial financing statement
    filed in specified circumstances and meeting
    specified requirements
  • Circumstances
  • To be filed in proper office under Article 9
  • Relates to pre-effective date filing in another
    jurisdiction or office

6
Tips On Filing And Searching
  • In Lieu Continuations
  • Requirements
  • Satisfies Part 5 requirements for an initial
    financing statement
  • Identifies the pre-effective date financing
    statement by
  • Office where filed
  • Filing date and file number of initial filing and
    last continuation
  • Indicate it remains effective
  • Get and keep a copy

7
Tips On Filing And Searching
  • Did You Actually File?
  • Communication to a filing office of a record
    meeting all the requirements of 516(b)
  • A wrongfully rejected record is effective as a
    filed record except as against a purchaser of the
    collateral who gives value
  • If a filing office refuses to accept a record, it
    shall communicate to the person that presented
    the record the fact of, reason for, date and time
    of refusal

8
Tips On Filing And Searching
  • What Appears In The Record?
  • A filer requesting an acknowledgment of a written
    record
  • May receive an image of the record showing its
    file number and filing date and time
  • May furnish the filing office an extra copy on
    which to note file number and filing date and
    time
  • Only the first alternative permits verification
    that information in the written record was
    entered correctly

9
Tips On Filing And Searching
  • What Appears In The Record?
  • For a record other than a written record the
    filing office shall communicate to the filer
  • The information in the record
  • The file number
  • The date and time of the filing

10
Tips On Filing And Searching
  • What Exactly Did You File?
  • Definition you filed what was communicated to
    the filing office
  • Unless rightfully rejected, that is now the filed
    record
  • Did you file the UCC1 or UCC3 with multi-page
    collateral description that you proofread?

11
Tips On Filing And Searching
  • What Exactly Did You File?
  • Was that simply a source document from which your
    filing agent retyped to make an electronic
    filing?
  • Can filing agent provide copy of actual text that
    was submitted?
  • What is your perfection opinion based on?
  • What does your perfection opinion say its based
    on?

12
Tips On Filing And Searching
  • Searching
  • Where to search
  • Locations of debtor and tangible collateral
  • What to search
  • Debtors current and former names, and variations
  • What the search results tell you

13
Tips On Filing And Searching
  • Article 9 Isnt Everything
  • An Article 9 Section 523 search report may
    disclose any federal tax liens
  • Debtors location for federal tax purposes may
    differ from its location for Article 9 purposes
  • Federal tax liens
  • Naming standards

14
Were Still In The Transition Phase
  • Continued Effectiveness of Pre-effective-date
    Filings Until The Earlier Of
  • Their natural lapse
  • June 30, 2006
  • Comprehensive search current and former
    locations
  • Continued effectiveness of financing statements
    filed under former Article 9

15
Were Still In The Transition Phase
  • Continuation of Pre-effective-date Financing
    Statements
  • Financing statements filed before the effective
    date of Article 9
  • If jurisdiction or filing office has changed,
    file an initial financing statement in lieu of a
    continuation

16
Were Still In The Transition Phase
  • Amendment and Termination of
    Pre-effective-date Financing Statements
  • Financing statements filed in the jurisdiction
    and office required by Article 9
  • File in same office
  • Financing statements not filed in the
    jurisdiction and office required by Article 9
  • File in lieu
  • Either with amended information, or as is then
    amend

17
Were Still In The Transition Phase
  • Amendment and Termination of
    Pre-effective-date Financing Statements
  • Alternative for termination of pre-effective-date
    financing statements
  • You can terminate by filing in the old office
  • But only if it hasnt been in lieued
  • And only if the office still accepts filings

18
Were Still In The Transition Phase
  • Words With Two Meanings
  • Terms in former Article 9 security agreement
    collateral description
  • Terms in former Article 9 financing statement
    collateral descriptions
  • Continuation Statements or In-Lieu Initial
    Financing Statements
  • Deemed authorization to amend

19
Electronic Filing Update
  • Summary of Delawares Electronic Filing Options
  • Direct online filing
  • Indirect XML entry via agents website
  • Manual filing
  • Some Pros and Cons
  • Manual filing the document you reviewed is
    filed
  • Online and XML source document for data entry
  • Whats Coming Next?
  • Filer keys in face data
  • Attachments via pdf

20
Getting The Debtors Name Right
  • Sufficiency of Debtors Name
  • Seriously Misleading Search Logic Test
  • What Is An Individuals Legal Name

21
Getting The Debtors Name Right
  • A Different Approach What Names Might Be
    Effective?
  • Under former Article 9, searchers were held to a
    standard of reasonable diligence
  • Under Article 9, tolerance for deviation is
    reduced
  • Model Administrative Rules (MARS)

22
Getting The Debtors Name Right
  • How Does MARS Search Logic Work?
  • MARS ignores punctuation, accents,
    capitalizations, spaces and other noise words
  • MARS ignores words or abbreviations indicating
    the nature of an organization
  • MARS does not ignore common variations and
    abbreviations, typographical errors or
    misspellings

23
Conclusions and Practice Tips
  • Filing
  • Know and follow non-uniform requirements of local
    law or filing office administrative rules
  • Get Debtors name right
  • Get the file number right
  • An in lieu continuation is an initial filing
  • Get and keep copies of old filings being in
    lieued to prove effectiveness
  • Whatever was properly communicated to the filing
    office is whats filed

24
Conclusions and Practice Tips
  • Searching
  • Places to search
  • Names to search

25
Conclusions and Practice Tips
  • Legal Opinions
  • What is the opinion based on
  • What does the opinion say it is based on
  • Opining as to priority of filings
  • Opining as to in lieu continuations

26
Questions and Answers
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