UCC Termination Statements, a Trap for the Unwary: Part Four
UCC
We are pleased to welcome back guest author, attorney, Bennett L. Cohen to the FCS blog! Read on for the fourth installment in his blog series addressing the intricacies of UCC Termination Statements.
UCC Termination Statements, a Trap for the Unwary: Part Four
If you want to be 100% sure that a UCC filing that has previously been assigned is properly terminated, you will need to exercise due diligence and inquire of the parties as to exactly what was assigned. It may further be necessary to have all secured parties in the chain of that UCC filing terminate or authorize the termination of such initial filing.
There may be more than one secured party of record on a UCC filing. Multiple secured parties can be reflected in the initial UCC financing statement or one or more secured parties can be added in one or more subsequent amendments to the initial UCC financing statement, resulting in multiple secured parties of record. In such case, all secured parties of record must terminate the UCC filing.
Code Section 9-512(e)(2) contemplates that one or more secured parties may be deleted from a UCC filing by amendment, with the proviso that an amendment purporting to delete all secured parties of record is ineffective.
If Bank A and Bank B merge with the surviving bank being Bank B, Bank B becomes the successor to the “secured party of record” with authority to terminate UCC filings previously filed in favor of Bank A. Official Comment 8 to Code Section 9-509.
About the Author
Bennett L. Cohenis a partner in the law firm of Cohen, Salk & Huvard, P.C. in Northbrook, Illinois, a Chicago suburb. Bennett regularly represents banks, commercial finance companies, insurance companies and other institutional lenders in the structuring, documentation and closing of commercial financing transactions, including asset-based loans, commercial loans, commercial real estate mortgage and construction loans, mezzanine loans, leveraged acquisitions, equipment lease loans and factoring transactions. Bennett is a member of the American Bar Association and serves on the ABA Committee on Commercial Financial Services and the ABA Subcommittees on Secured Lending, Loan Documentation and the Uniform Commercial Code. Bennett can be contacted at bcohen@cshlegal.com.