Law Commons^™

Immovable-Associated Equipment Under The Draft Mac Protocol: A Sui Generis Challenge For The Cape Town Convention, Benjamin Von Bodungen, Charles W. Mooney Jr.

All Faculty Scholarship

UNIDROIT is in the process of adopting a fourth Protocol under the umbrella of the Cape Town Convention, the MAC Protocol, which will cover mining, agricultural and construction equipment. This article addresses a challenge faced by the MAC Protocol that was not encountered in the development of the previous Protocols - the potential for MAC equipment to be associated with immovable property in ways that result in the holder of an interest in the immovable property acquiring an interest in the associated MAC equipment under the law of the State in which the immovable property is located. The article first …

Ownership And Possession, Thomas W. Merrill

Faculty Scholarship

One of the enduring mysteries about property is why the law protects both ownership and possession. In a pre-modern world, with low rates of literacy and no formal method of registering titles, one can understand why the law would protect possession. In such a world, there may be no concept of property beyond the understanding that persons should respect possessory rights established by others. It is less clear why possession should be protected once property comes to be understood as ownership. Ownership and possession will commonly overlap, and protecting ownership will protect possession. Nevertheless, even in the most sophisticated legal …

The Cape Town Convention’S Improbable-But-Possible Progeny Part One: An International Secured Transactions Registry Of General Application, Charles W. Mooney Jr.

All Faculty Scholarship

This essay is Part One of a two-part essay series. It outlines and evaluates two possible future international instruments. Each instrument draws substantial inspiration from the Cape Town Convention and its Aircraft Protocol (together, the “Convention”). The Convention governs the secured financing and leasing of large commercial aircraft, aircraft engines, and helicopters. It entered into force in 2006. It has been adopted by sixty Contracting States (fifty-four of which have adopted the Aircraft Protocol), including the U.S., China, the E.U., India, Ireland, Luxembourg, Russia, and South Africa.

A novel, distinctive, and path-breaking feature of the Convention is the international registry …

When Is A Dog’S Tail Not A Leg?: A Property-Based Methodology For Distinguishing Sales Of Receivables From Security Interests That Secure An Obligation, Steven L. Harris, Charles W. Mooney Jr.

All Faculty Scholarship

There are two principal ways in which a firm that is owed money payable in the future but needs the money now may use its rights to payment (“receivables”) to obtain the needed financing. It might sell its receivables, or it might borrow and use the receivables as collateral to secure the loan. Different legal consequences follow depending on whether the transaction is a true sale or is a security interest that secures an obligation (a “SISO”).

These legal consequences are particularly salient when the firm enters bankruptcy. If the transaction is a sale, then the buyer can collect the …

Harmonizing Choice-Of-Law Rules For International Insolvency Cases: Virtual Territoriality, Virtual Universalism, And The Problem Of Local Interests, Charles W. Mooney Jr.

All Faculty Scholarship

This paper explores the potential content and feasibility of a set of harmonized choice of law rules (HICOL Rules) that would apply in insolvency proceedings. It contemplates a main insolvency proceeding opened in a debtor’s center of main interests (“COMI”) and the existence of (or possibility of opening) one or more non-main (or secondary) proceedings. It also contemplates the possibility that an insolvency representative in a main or non-main proceeding may seek and be granted recognition in another state under the UNCITRAL Model Law on Cross-Border Insolvency (codified as Chapter 15 of the Bankruptcy Code in the U.S.) Under HICOL …

Dodd-Frank Orderly Liquidation Authority: Too Big For The Constitution?, Thomas W. Merrill, Margaret L. Merrill

Faculty Scholarship

Title II of the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010 establishes a new specialized insolvency regime, known as orderly liquidation, for systemically significant nonbank financial companies. While well intended, Title II unfortunately raises a number of serious constitutional questions. To vest authority in an Article III judge to appoint a receiver for such companies, yet also avoid a financial panic, Dodd–Frank requires that the judicial proceedings be conducted in secret, with no notice to the public or other interested parties on pain of criminal penalties, and that the judge rule on the petition to appoint the …

Securitization Of Aberrant Contract Receivables, Thomas E. Plank

Scholarly Works

Originators of traditional receivables, such as automobile loans, use securitization and structured finance debt transactions to obtain financing at lower net costs than traditional secured financing. The typical securitization or structured finance debt transaction combines (i) a sale of receivables to a separate, bankruptcy remote, special purpose legal entity (an “SPE”) and (ii) a loan to the SPE secured by the receivables. This combination produces lower net financing costs because the SPE’s lender can obtain repayment of its loan from the receivables while avoiding the costs that the Bankruptcy Code imposes on direct secured lenders to originators that could become …

U.C.C. Article 9, Filing-Based Authority, And Fundamental Property Principles: A Reply To Professor Plank, Steven L. Harris, Charles W. Mooney Jr.

All Faculty Scholarship

Uniform Commercial Code Article 9 generally follows the common-law principle that one cannot give rights in property that one does not have (nemo dat quod non habet). In many circumstances, however, Article 9’s priority rules, including its rule awarding priority to the first security interest that is perfected or as to which a financing statement has been filed, trump nemo dat and enable a debtor to grant a senior security interest in property that the debtor previously had encumbered. In this article, Professors Steven Harris and Charles Mooney argue that, properly understood, the first-to-file-or-perfect rule confers upon a debtor the …

Optimizing English And American Security Interests, Lynn M. Lopucki, Arvin I. Abraham, Bernd P. Delahaye

UF Law Faculty Publications

Since the adoption of Uniform Commercial Code Article 9 in American jurisdictions in the 1960s, scholars have debated the desirability of the extraordinary priority given to secured creditors. Through a point-by-point comparison of English and American security interests, this article provides a new perspective on that long-running debate. The comparison reveals that security functions in strikingly similar manners in the two jurisdictions, while differing sharply in one crucial respect. In contrast to the absolute priority given secured creditors under American law, English law subordinates floating charges to administrative expenses, preferential creditors, and a prescribed share for unsecured creditors. Other, less …

Cars In Chapter 13: Does Negative Equity Destroy The Jurisdiction Of The Hanging Paragraph, David G. Carlson

Articles

Roughly speaking, the “hanging paragraph” to Bankruptcy Code 1325(a), enacted in 2005, requires that a debtor pay the full debt on any automobile acquired within 910 days before bankruptcy – a boon for car financiers. Prior to 2005 the debtor had to pay only the appraised value of the car – usually a lesser amount. But the privilege bestowed on car financiers by the hanging paragraph depends on the financier providing “purchase money” credit. About one-third of the time, however, the financier advances funds to repay a prior car loan as part of the “trade-in” of an old vehicle for …

The Recent Amendments To Ucc Article 9: Problems And Solutions, David Frisch

Law Faculty Publications

This article examines three of the forthcoming amendments to Article 9 in some detail: (1) the required name of an individual on a financing statement; (2) the perfection of collateral following the debtor's relocation to a new jurisdiction; and (3) collateral acquired by a new debtor. In the interest of brevity, the discussion of other, less noteworthy, amendments of the statutory text and Official Comments is not as complete. The primary purpose of this article is to off er guidance to legal professionals confronting particular issues under current and future Article 9.

Chuck And Steve's Peccadillo (Symposium: Threats To Secured Lending And Asset Securitization), James J. White

Articles

Are investors in securitized receivables to be treated as the owners of an asset whose sale has taken it beyond the reach of the trustee in bankruptcy of their sellers? O are they to be treated as holders of a security interest in the transferred asset who have left behind an interest in the sellers' hands that would cause the asset to be subject to claims and interference by the sellers' grasping trustee? By adopting contrasting-arguably conflicting-statements in two subsections of a single section, the drafters of 1999 Article 9 have thrust this issue in the faces of courts and …

Searching For Federal Tax Liens: The Typical Search For Ucc Financing Statements May Not Be Good Enough, Dennis H. Long

Articles by Maurer Faculty

No abstract provided.

Death And Resurrection Of Secured Credit, James J. White

Articles

The Bankruptcy Reform Act of 1978 (the Code) posed palpable threats to secured creditors. It was drafted by a commission that was at least as concerned with the rights of debtors as with the rights of creditors. It was modified and adopted by a Congress that might have been the most liberal since World War II and signed into law by President Carter at the apogee of the left's power, two years before the Reagan election that marked the rise of the right and the beginning of the left's decline. The power of the left was exerted most forcefully on …

Are Security Deposits "Security Interests"? The Proper Scope Of Article 9 And Statutory Interpretation In Consumer Class Actions, R. Wilson Freyermuth

Faculty Publications

Assume that Jane Doe leases an automobile from a General Motors dealer, pursuant to a lease contract under which Jane makes a cash security deposit. Under the lease, the lessor agrees to “refund” the deposit at the conclusion of the lease term in the event that Jane fully performs her obligations under the lease. Is this transaction governed by Article 9--i.e., has the lessor taken a “security interest” in Jane's cash deposit to secure Jane's obligations under the lease agreement?

Introducing Revised Article 9 Of The Uniform Commercial Code, John L. Mccabe, Arthur H. Travers

Publications

No abstract provided.

A Central Filing System For Financing Statements, Arthur H. Travers Jr., John L. Mccabe

Publications

No abstract provided.

Bankruptcy Takings, Julia Patterson Forrester Rogers

Faculty Journal Articles and Book Chapters

The Takings Clause is a vital consideration in determining the treatment of secured creditors in bankruptcy. This Article will explain why the Takings Clause is relevant and why scholars engaged in the debate over secured credit must consider the constitutionality of their proposals in light of the takings issue. In Part I of the Article, I explore the ways in which current bankruptcy law provides protection and gives deference to property rights. I also discuss certain proposals that would reduce the protection given to secured parties. Part II provides an overview of takings law and discusses some of the cases …

Rights Of Subrogation In Letters Of Credit Transactions, James J. White

Articles

The past twenty years have seen more than a dozen cases, in which parties to letter of credit transactions have sought subrogation to the rights of the person they have paid or to the rights of the persons on behalf of whom, they have acted.' The most obvious case arises when the issuer of a standby letter of credit pays a beneficiary on a debt that is owed to the beneficiary by a bankrupt applicant. Having failed to take 'collateral from the applicant, the issuer seeks to be subrogated to the security interest of the beneficiary. Failing subrogation, the issuer …

Security Interests On Exempt Property After The 1994 Amendments To The Bankruptcy Code, David G. Carlson

Articles

No abstract provided.

The Implicit "Takings" Jurisprudence Of Article 9 Of The Uniform Commercial Code, David Frisch

Law Faculty Publications

Part I of this Article begins by reasserting that central to the idea of property rights is the legal entitlement to remedies that permits a person to exercise dominion over the specific asset or to exclude the exercise of dominion by others. Next, part I examines the essence of a security interest and demonstrates that it is a protected property interest. Part II sets forth a model of priorities that suggests that although property interests should ordinarily be protected by a property rule, there is something special about a security interest, implying the need for greater contingency and justifying a …

Reforming Article 9 Priorities In Light Of Old Ignorance And New Filing Rules (Symposium: 'Managing The Paper Trail': Evaluating And Reforming The Article 9 Filing System), James J. White

Articles

The other papers in this Symposium demonstrate that we have the technical capacity to build a filing system that will exceed the expectations of Grant Gilmore in every dimension.1 With more thought about what is put into the system and more clever software to get it out, the most sophisticated system possible under current technology will store and produce enough information about a debtor to give the ACLU a fright. All of the issues on improving the filing system are important, but I do not concern myself with any of them directly. I am here discuss a different question. In …

Purchase Money Under The Uniform Commercial Code, David G. Carlson

Articles

No abstract provided.

Preference Conundrums, James J. White, Daniel Israel

Articles

Every law teacher and many law students and practitioners understand the intellectual sport to be found in Section 547 on preference law. Because the preference rules are so intricate, rigorously logical-but really not logical-they command more than their fair attention, not only in law school but also in continuing legal education and even in the courts. Our purpose in this article is not to answer any of the difficult questions or to give a global explanation of preference law. Rather it is to confront a few of the conundrums in Section 547 and to follow the paths of those conundrums …

The Unbearable Lightness Of Title Under The Uniform Commercial Code, William Tabac

Law Faculty Articles and Essays

This Article will offer the heresy that the transactions in goods that the Code regulates are still firmly grounded on ownership principles and that these principles must be reckoned with to fulfill the Code's design. It is therefore important first to identify the various property interests in goods that one can obtain under the Code and determine how the Code ties these interests to title.

Absolute Priority And New Value, James J. White

Articles

This paper is based on a lecture given on December 6, 1990 ast the Second Annual Robert E. Krinock Lecture. The absolute priority rule is a specific application of the broader doctrine that reorganization plans must be "fair and equitable." Both have their origins in the railroad reorganization cases of the early 20th century. The general doctrine is now codified in section 1129(b)(2) of the Bankruptcy Code and the rule is codified in subsection 1129(b)(2)(B)(ii) which provides that the debtor must pay a nonconsenting class of unsecured creditors in full or "the holder of any claim or interest that is …

Security Interests Under Article 8 Of The Uniform Commercial Code, Jeanne L. Schroeder, David G. Carlson

Articles

No abstract provided.

Taking From Farm Lenders And Farm Debtors: Chapter 12 Of The Bankruptcy Code, James J. White

Articles

In passing Chapter 12 of the Bankruptcy Reform Act, Congress has effectively invalidated certain important provisions of existing farm mortgages. Equally significant, Congress has disabled farmers from granting binding mortgages on the full, value of their property. Although no court is likely to find the Chapter to violate the fifth amendment, the Chapter constitutes a substantial and retroactive alteration of the rights of existing mortgagees and a restriction on the powers of prospective mortgagors to grant valid mortgages. The thesis of this paper is that Congress was both wrong and shortsighted in its enactment of Chapter 12. Congress was wrong …

Dancing On The Edge Of Article 9, James J. White

Articles

Despite the fact that Article 9 is a much more comprehensive personal property security statute than was ever found in American law prior to its enactment, cases continue to present issues on the scope of the Article. Gone are the cases in which a court was called upon to determine whether a "conditional sales contract" could be dealt with under the "factor's lien" law; it is now clear that all such personal property security devices are governed by Article 9. Yet many problems remain for the unwary lawyer. I will identify several and deal in detail with three of these …

Modernizing Kentucky's Uniform Commercial Code, Harold R. Weinberg, Louise Everett Graham, Thomas J. Stipanowich

Law Faculty Scholarly Articles

In 1958 Kentucky became the third state to enact the Uniform Commercial Code promulgated by the American Law Institute and the National Conference of Commissioners on Uniform State Laws. The General Assembly stated that this legislation was intended to modernize, clarify and simplify the law of commercial transactions. Enactment of the Code also evidenced the legislature's intent to make Kentucky commercial law uniform with that of the other states. Subsequent General Assemblies further implemented these policies by enacting substantially all of the uniform amendments to the Code proposed by the ALI and NCCUSL through 1964.

Unfortunately, these enactments represent our …