When
do the new provisions of Article 9 of the UCC take effect?
In 1999 Texas amended its version of Article 9, secured transactions, with
a major update of that article to be effective July 1, 2001. Lenders have
had nearly two years to get ready for the new provisions. It is now time to
be sure that you are ready to implement the rules of the new Article Nine
(NA9).
How are UCC-1 financing statement filing procedures going to change?
One of the major changes is that financing statements will now be filed in
the debtor’s state of organization. For example a Delaware corporation
pledging equipment in Texas will have its financing statement filed in Delaware.
Another big change is that financing statements will not need to be signed
by the Debtor.
Are there now new types of transactions covered by the UCC?
Yes. Beginning July 1, 2001, sales of notes and sales of payment intangibles
(e.g. credit card receivables portfolio) are covered by Article 9. NA9 provides
that the purchaser’s rights in the purchased notes (including loan participation)
and payment intangibles are automatically perfected. This protects the investor
from the rights of a bankruptcy trustee for the seller.
Also,
the pledging of deposit accounts and certain rights under letters of credit
are covered by NA9.
What are the new types of collateral under the New Article 9?
Accounts have been expanded to include health care insurance receivables.
Some items that were previously intangibles will now be accounts. Commercial
Tort Claims are now covered as collateral under NA9, as is Electronic Chattel
Paper. Payment Intangibles are a new category.
How long do we have to get into compliance with NA9?
All transactions closing after June 30, 2001, will be covered by NA9. For
existing transactions where the rules for attachment and perfection are the
same under old nine and NA9, no action is necessary. For existing transactions
where financing statements did not have to be filed to perfect, if the old
rules and the NA9 rules are different, you have until July 1, 2002 to conform
to NA9. For existing transactions where financing statements were filed and
if the old rules and NA9 rules are different, you have until the expiration
date of the existing financing statement to conform to NA9.
What are the other states doing?
There is a nationwide state by state change. But not all states have adopted
the NA9, only 37 so far. If another state does not adopt NA9 that is somehow
related to your transaction, you may have to follow two sets of rules and
do double UCC searches and filings.
How can I find out more?
The Web offers various sites including The NA9 law is about 275 pages long
if you want to read it. The Davis law Firm can put on a free seminar for you
and your staff. The seminar is approximately 2 hours in length.
Call
Johnnie Davis at (512) 472-4444 for more information.