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American Bar Association

ABA Section of Business Law


Business Law Today

Our mini-theme: Weird Collateral

At first blush, attaching and perfecting your client's security interest seems like a fairly cut-and-dried subject. Or is it? The mini-theme for this issue discusses "weird" collateral--that is to say, collateral that is unusual in the way it is addressed under the UCC, or outside the UCC. These unusual aspects may be that the collateral is not recognized under the logical provisions of the UCC, or that a different path must be pursued to attach and perfect the security interest.

We begin with a piece by Kristin David Adams, who addresses how the proceeds derived from investments and those resulting from agricultural assets can be treated quite differently under revised Article 9 of the UCC. She stresses the difficulty in predicting how courts will interpret the term "proceeds," and accordingly, the need for lawyers to address the issue when drafting security agreements.

Next, Katherine Simpson Allen discusses the complexities of equine collateral. Whether the transaction focuses on the horse being used to race or to breed will determine the nature of that collateral, affecting attachment, perfection, and priority rules. Yet that is an oversimplification, and the author delineates a myriad of variables in the thoroughbred business that will give you a new appreciation for the complexities of equine transactions.

Warren Agin then writes about domain names as collateral, pointing out that lenders need to think about the roles domain names play in their borrowers' businesses and in their portfolio of collateral.

Stephen Sepinuck, the Chair of the Section of Business Law Uniform Commercial Code Committee, contributes his discussion on vanishing collateral, i.e., collateral that may dissipate, leaving the secured party with only the debtor's promise to pay. He provides an overview of two recent decisions and the lessons they provide.

Finally, Bradley Gibson discusses how many of the mezzanine loans made in the last few years are being refinanced, and how secured lenders who perfected their security interests by control of a certificated security may face some significant challenges if they have lost their certificates.

We hope these articles help you to start thinking about the different ways collateral will be treated, and the need to address those variables when entering into and perfecting future security agreements.

--Kathleen Hopkins

Seattle



Of stockyards and stock exchanges
Proceeds puzzles under revised UCC Article 9
By Kristen David Adams

A horse is a horse (of course)
Equine collateral
By Katherine Simpson Allen

Domain names as collateral
Are we all just kidding ourselves?
By Warren E. Agin

Vanishing collateral
The perils of some intangible collateral
By Stephen L. Sepinuck

My dog ate the (security) certificates
What's the big deal?
By Bradley Gibson

ALSO IN THIS ISSUE:

Teach an old UCC dog new tricks
An overview of the U.N. Convention on the International Sale of Goods
By Christine E. Nicholas

Excess D&O insurance
The exhaustion by payment condition
By Eric S. Connuck

Navigating China and U.S. law
A growing practice area
By Dennis M. Horn

Data security and ethical hacking
Points to consider for eliminating avoidable exposure
By Ronald I. Raether Jr.

Properly investigating complaints of harassment
How to limit a company's exposure
By E. Jason Tremblay

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