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Secured Transactions
University of Minnesota Law School
Adams, Edward S.

Creditors Remedies & Secured Transactions

Introduction

I. Exam Approach – SEE NOTES 10-24 for a little note on starting place.
a. Does the Transactions Fall Within the Scope of Article 9?
i. Look for intent to create a security interest, whether the type of collateral or transaction is covered by Article 9, and whether any exclusions Apply
1. For the exam this will usually be yes.
b. Has a Valid Security Agreement Arisen (Has it Attached to the Collateral)?
i. Without attachment, there is no security interest.
c. Is the Security Interest Perfected?
i. Check for the 4 types of perfection: (1) filing, (2) possession, (3) control, and (4) automatic (i.e. PMSI in consumer goods)
d. Is the Party in Bankruptcy or Default?
i. If bankruptcy, follow the general priority rules.
1. Against Whom Will the Secured Party Prevail (General Priority Rules)?
a. Creditors with perfected security interests prevail over creditors with unperfected security interests.
b. When determining whether a creditor with a perfected security interested will prevail over another creditor with a perfected security interest, use rules such as:
i. The first to file or perfect wins [CITE] ii. The PMSI super-priority rule [CITE], and
iii. Control beats filing [CITE] c. However, even is a creditor with a perfected security interest prevails under the above rules they may still loose out to a BIOCB [CITE] or certain others.
2. Is the Secured Party’s Interest Valid in Bankruptcy?
a. Be sure there was perfection
b. Is the Secured Interest subject to attack as a preference?
c. Is the Secured Interest subject to attach as a fraudulent transfer?
ii. If in default, follow the default rules
1. Default Rules.
II. Definitions
a. Lien – this is an interest in the debtor’s property given by the law to protect a creditor. There are different kinds of liens which are created in different ways.

i. Judicial – this is when a line arises as a result of some judicial action and is usually enforced by the sheriff.
1. Writ of Attachment – a prejudgment attachment of the debtor’s property so that if the creditor ultimately prevails, the creditor will be assured of recovering on the judgment. This is a seizure of property without notice and opportunity to he heard, thus it is very rare.
2. Writ of Execution – This is a court order directing a sheriff to enforce a judgment by seizing ands selling the debtor’s property. This is repossession of property from the debtor. This is fairly common. However, each state by statue has defined things which are exempt from repossession (MN – family bible, car of less than 2K, ho

eement” and never uses the term “security interest” does not preclude it for being a security agreement or creating a security interest. In addition to creating a security interest, a good security agreement will identify the parties, describe the collateral, and dictate specific events of default. See highlighted and tabbed example.

d. Financing Statement – This is an extremely simple form that is meant only to give notice to third parties of the security interest. It is generally a UCC-1, but can be any form with the information listed in 9-502(a). 9-502(a) requires only (i) the name of the debtor, (ii) the name of the secured party or representative of the secured party, and (iii) an indication of the collateral covered by the financing statement.

e. Secured Party 9-102(72) – This is basically the lender, seller, or person [purchaser in the case of accounts, chattel paper, payments intangible, and promissory notes (D)] in whose favor the security interest is created.

Obligor 9-102(59) – The obligor is the person who owes the debt to the obligor.