Does Revised Article 9 Increase the Risk of Fraud Through Unsigned Termination Statements?
by Rob Charles, Lewis and Roca LLP, Tucson, Ariz.
Under Revised Article 9 of the Uniform Commercial Code, a recorded financing statement must be “authorized” by the debtor, but is not required to be signed by the debtor. Similarly, a termination statement must be “authorized,” but is not required to be signed by the secured party.
Reasonable and Diligent Search Must Include Search of Name Abbreviations
by Andrew P. Moratzka; Mackall, Crounse & Moore PLC; Minneapolis
The Sixth Circuit recently held that a “reasonable and diligent” search requires a lender to search certain name abbreviations when conducting a lien search in the Secretary of State’s Office. In re Spearing Tool and Mfg. Co., --- F.3d ----, 2005 WL 1430501 (6th Cir. 2005).
Crestmark had a lending relationship with Spearing Tool and Manufacturing Co. (“Spearing”). In 1998 and 2001, Crestmark perfected two security interests in Spearing’s assets by filing a UCC financing statement using “Spearing Tool and Manufacturing Co.,” Spearing’s precise name registered with the Michigan Secretary of State. Because of a delinquency in federal employment-tax payments towards the end of 2001, the IRS filed two notices of a federal tax lien against Spearing with the Michigan Secretary of State. Each lien identified Spearing as “Spearing Tool & Mfg. Company Inc.,” which varied from the precise name registered with the Michigan Secretary of State. Crestmark, unaware of the tax liens, advanced more funds after the IRS filed the tax lien. Crestmark discovered the tax liens after Spearing filed for bankruptcy relief. Two issues were before the court.
Agenda for the 2005 Winter Leadership Conference
The Uniform Commercial Code Committee will meet at 9:30 a.m., Saturday, December 3, 2005 at the 2005 Winter Leadership Conference. A panel program on “The Intersection of UCC Article 2A and the Bankruptcy Code.” The panel will discuss various aspects of Article 2A that commonly arise in bankruptcy proceedings, including true vs. financing lease issues, the ability to assert defenses against finance lessors and the protection and recovery of leased property in bankruptcy cases. Register to attend the Winter Leadership Conference today.