Joint Newsletter of the ABA Section of Business Law
Committees on Commercial Finance and Uniform Commercial Code
  Commercial Law Newsletter
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Messages from the Chairs
  Committee on Commercial Finance
  Committee on Uniform Commercial Code

Mark Your Calendars!

2008 Section of Business Law Spring Meeting Schedule

Attending Your First Meeting?

Steven Weise Receives Lifetime Achievement Award

Tribute to Earl Glick

Useful Links and Websites

Committee on Uniform Commercial Code: Spotlight

Featured Articles
  Loan Syndications and Trading: An Overview of the Loan Syndications & Trading Association and the Leveraged Loan Market
  If the Land Is Here, You May Be Practicing Law Here: UPL and Ethics Issues in Multi-State Real Estate Closings
  Made in Heaven or Oil and Water: ADR in Commercial Finance Disputes
  Earth, Wind and Soybeans: The State of Alternative Energy Finance

Committee on Commercial Finance: Subcommittee, Taskforce and Liason Reports
  Subcommittee on Aircraft Financing
  Subcommittee on Creditors' Rights
  Subcommittee on Cross-Border and Trade Financing
  Intellectual Property Financing Subcommittee
  Subcommittee on Lender Liability
  Subcommittee on Loan Documentation
  Subcommittee on Loan Workouts
  Subcommittee on Real Estate Financing
  Subcommittee on Securitization and Derivatives
  Subcommittee on Syndications and Lender Relations
  Model Intercreditor Agreement Taskforce
  ABA Section of Business Law Legal Opinions Committee: Cross-Border Opinion Initiative

Committee on Uniform Commercial Code: Subcommittee and Taskforce Reports
  Subcommittee on Article 8
  Subcommittee on General Provisions and Relations to Other Law
  Subcommittee on Letters of Credit
  Subcommittee on Payments
  Subcommittee on Sale of Goods
  Task Force on Forms Under Revised Article 9
  Task Force on State Certificate of Title Laws

Joint Subcommittee Report
  Subcommittees on Secured Lending (ComFin) and Secured Transactions (UCC)

Joint Task Force Reports
  Joint Task Force on Commercial Finance Terms
  Joint Taskforce on Deposit Account Control Agreements
  Joint Taskforce on Filing Office Operations and Search Logic

UCC Scorecard

Committee Leadership Rosters

Editorial Board:

Christine Gould Hamm
    Co-Editor (ComFin)
    Husch Blackwell Sanders LLP
    816-283-4626

Maria Milano
    Co-Editor (UCC)
    Riddell Williams P.S.
    206-389-1752

  Messages from the Chairs
   
Lynn Soukup, Chair Committee on Commercial Finance
Lynn Soukup, Chair, Pillsbury Winthrop Shaw Pittman LLP

I've been giving a lot of thought since the last newsletter to what the ComFin Committee offers for its members and (more importantly) what those members want. A survey that the Business Law Section recently conducted indicates that many members don't attend in-person meetings and are looking for information and networking through other means. So while there is much going on at upcoming meetings, from information on legal and market developments to networking opportunities, we've also been sending out more information via emails, listserves, newsletters, blogs and websites and will continue to do so. We've also highlighted in this issue a listserve used by many commercial finance lawyers to discuss issues and some web-based resources in the area of commercial law. If there are other ways we can provide information sharing, networking or other resources to ComFin Committee members, please let me know.

We've again made this issue of the newsletter "open access" so that you can forward it to colleagues who would be interested in the Committee. I'd like to enlist your help in publicizing ComFin's many activities, whether by forwarding the newsletter or emails on upcoming events of interest or bringing a colleague to a meeting or to attend the Committee dinner in Dallas on April 10th.

More...

Stephen Sepinuck, ChairCommittee on Uniform Commercial Code
Stephen L. Sepinuck, Chair, Gonzaga University School of Law

The UCC Committee is continually striving to provide its members on a timely basis with important information about developments in commercial law and commercial practice. Anyone with a suggestion for a project the Committee should undertake or with an idea about how the Committee can better fulfill its mission should contact me.


Noteworthy Events at Spring Meeting

The UCC Committee is presenting two wonderful programs at the Spring meeting in Dallas:

Secured Transactions South of the Border (co-sponsored by the Commercial Finance Committee), Friday, April 11, 2008, 2:30pm–4:30pm

Successor Liability in § 363 Bankruptcy Sales and UCC Foreclosures (co-sponsored by the Commercial Finance and Business Bankruptcy Committees), Saturday, April 12, 2008, 1:00pm–3:00pm

More...

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  Mark Your Calendars!
 
  • 3/11/08 - Evolution of the Model Form Deposit Account Control Agreement: Use in the Marketplace and Using the New Inserts
    If you are tired of problems with Deposit Account Control Agreements on the eve of closing, this CLE teleconference is for you. The original model form DACA, published by the ABA Joint Task Force on Deposit Account Control Agreements in 2006, dealt with the typical transaction a demand deposit account where the debtor continued to have access to the account. Learn how the model form works and is being utilized currently in the marketplace, as well as how to use the recently finalized inserts for other types of transactions, including lock box arrangements, sweep accounts, time deposits, initially blocked accounts, and much more. Details and registration information are available at http://www.abanet.org/cle/programs/t08emf1.html.

  • 3/13-14/08 - Globalizing Secured Transactions Law Current Problems, New Directions
    This CLE program, co-sponsored by the Business Law Section, will feature analysis of international sales of goods on credit, off-shore project finance, securitization of non-U.S. receivables and other commercial transactions involving secured credit across international borders. Panelists also will discuss where the global credit crisis is spreading, and how litigators, transactional lawyers and financial institutions may be affected. For additional information, please visit http://www.tjsl.edu/GlobalizingSecuredCredit.

  • 3/17/08 - Filing Office Operations and Search Logic Taskforce
    The Taskforce on Filing Office Operations and Search Logic ("FOOSL") will hold its next conference call on March 17, 2008. Details and a recap of the January and February 2008 calls are posted on the Taskforce website.

    More...

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  Attending Your First Meeting?
   
If you'll be attending your first ABA meeting in Dallas, please join us for the UCC and ComFin dinner on Thursday, April 10. Details on the dinner are available here. Attending the UCC Committee or ComFin Committee meetings, forums and programs is a good way to meet people and get an overview of what the committees are doing:
  • ComFin Committee Meeting will be held Thursday, April 10, at 10:00 a.m. 10:30 a.m.
  • ComFin Committee Forum "Syndicated Loan Market Update" will be held Thursday, April 10, at 10:30 a.m. 12:30 p.m.
  • UCC Committee Program "Made in Heaven or Oil and Water: ADR in Commercial Finance Disputes" will be held Thursday, April 10, at 2:30 p.m. 4:30 p.m.
  • ComFin Committee Program "Earth Wind and Soybeans: The State of Alternative Energy Finance" will be held Friday, April 11, at 10:30 a.m. 12:30 p.m.
  • UCC Committee Meeting will be held Friday, April 11, at 2:00 p.m. 2:30 p.m.
  • UCC Committee Forum "Secured Transactions South of the Border," co-sponsored by the ComFin Committee, will be held Friday, April 11, at 2:30 p.m. 4:30 p.m.
  • ComFin Committee Program "Commercial Law Developments" will be held Saturday, April 12, at 10:30 a.m. 12:30 p.m.
  • UCC Committee Program "Successor Liability in § 363 Bankruptcy Sales and UCC Foreclosures" will be held Saturday, April 12, at 1:00 p.m. 3:00 p.m.
And, we'll be hosting a conference call in advance of the meeting to discuss how to navigate the multi-page meeting schedule to get the most out of the meeting email Susan M. Tyler (styler@mcglinchey.com), Norman M. Powell (npowell@ycst.com,) or Sherman G. Helenese (sherman.helenese@wamu.net), the ComFin Membership Committee Liaisons, or Terri A. Motosue (tmotosue@carlsmith.com), the UCC Membership Committee Liaison, if you would like to be part of that call or have questions about the meeting.

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  Steven Weise Receives Lifetime Achievement Award
   
The Business Law Section of the State Bar of California awarded its Lifetime Achievement Award for 2007 to Steven O. Weise at the September Annual Meeting of the State Bar of California in Anaheim. The award is given each year to a member of the California State Bar who has made significant contributions to the Business Law Section and to business law generally in the State of California over an extended period and who has achieved high status in the legal community. Steve is a nationally recognized expert in all areas of commercial law and his résumé runs almost 40 pages and none of it filler. The Commercial Finance Committee and the UCC Committee warmly add their congratulations to Steve for a very well deserved award.

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  Tribute to Earl Glick
   

Once again we have lost one of the founding members of the Commercial Finance Committee as well as one of the leaders in the field of commercial finance, Earl Glick of Los Angeles. Earl died in early January just short of 78 years old. He was there at the beginning of the CFS committee in 1983 and served as the Program Committee Chair from 1988-1992. He was a regular participant on panels and an active member of the committee for many years.

More...

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  Useful Links and Websites
  Maria Ann Milano, UCC Committee Editor
We are adding a new feature to the Commercial Law Newsletter. The electronic links provided below are not ABA-affiliated sites, but are resources our members find useful:
  1. The UCCLAW-L listserv, which is sponsored by Thomson West, publisher of the "UCC Reporting Service." To subscribe to the UCCLAW-L listserv, go to
    http://lists.washlaw.edu/mailman/listinfo/ucclaw-l;
  2. U. Penn's archive of NCCUSL final acts and drafts can be accessed at
    http://www.law.upenn.edu/bll/archives/ulc/ulc.htm;
  3. Pace University's database of CISG decisions can be accessed at
    http://cisgw3.law.pace.edu; and
  4. Gonzaga University's new Commercial Law Center has a variety of links to useful sites and can be accessed at
    http://www.law.gonzaga.edu/About-Gonzaga- Law/Commercial-Law-Center/default.asp.

If you have other electronic resources you would like to see included in future editions of the Commercial Law Newsletter, please submit them to either Christine Gould Hamm, the Commercial Finance Editor, or Maria Ann Milano, the Uniform Commercial Code Editor.



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  Committee on Uniform Commercial Code: Spotlight
  Stephen L. Sepinuck, UCC Committee Chair
Kristen Adams, Chair, Subcommittee on General Provisions & Relations to Other Law
The purpose of this column is to identify some of the most disconcerting judicial decisions interpreting the Uniform Commercial Code or related commercial laws. The purpose of the column is not to be mean. It is not to get judges recalled, law clerks fired, or litigators disciplined for incompetence. Instead, it is to shine a spotlight on analytical errors, and thereby provide practitioners and judges with reason to disregard the opinion.

First National Bank of Picayune v. Pearl River Fabricators, Inc.,
2007 WL 3407401 (La. 2007)

This case presents a priority dispute between a creditor with a security interest in equipment and a buyer located in a jurisdiction different from the original debtor. Unfortunately, what should have been a fairly straightforward application of § 9-316(a)(3), and § 9-317(b) became muddled with analysis of irrelevant issues and inapplicable law. Nevertheless, the court's ultimate conclusion in favor of the buyer was correct.


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  Featured Articles
 
Loan Syndications and Trading: An Overview of the Loan Syndications & Trading Association and the Leveraged Loan Market
Bridget Marsh and Ted Basta, Loan Syndications & Trading Association

The business of corporate loan syndications, trading, and investing has changed dramatically over the past 15 to 20 years. Up until then, banks made loans to their corporate borrowers and typically held those loans on their books. It was never contemplated that loans would be traded and managed by investors like stocks and bonds in a portfolio. Eventually, however, investors were drawn to the attractive features of loans - unlike bonds, loans were senior secured debt obligations with a floating rate of return - and, over the years, a full institutional asset class emerged. Today, such loans are not just held by banks but typically sold to other banks, institutional investors, mutual funds, insurance companies, structured vehicles, pension funds, and hedge funds. Consequently, the past 15 years has witnessed an explosion in the volume of loans being issued in the primary market and traded in the secondary market.


More...

If the Land Is Here, You May Be Practicing Law Here: UPL and Ethics Issues in Multi-State Real Estate Closings
Norman M. Powell, Young Conaway Stargatt & Taylor, LLP

Law firms and title companies throughout the country conduct and facilitate complex, multi-state real estate closings. They often do so from main offices, national accounts offices, or other central locations. But they may face charges of unauthorized practice of law, and their in-house counsel may be charged with violating ethics rules, if any of the real estate is located in certain jurisdictions.

Some jurisdictions regulate certain aspects of the real estate transaction as the practice of law, and prosecute non-lawyers for violations.


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Made in Heaven or Oil and Water: ADR in Commercial Finance Disputes
Thomas J. Welsh, Brown & Welsh, P.C.

Commentators have reported that with trillions of dollars of financing activity in the United States each year, commercial finance disputes make up a disproportionately small proportion of the cases decided using alternative dispute resolution ("ADR") techniques. Hostility to use of these techniques is legend – an informal poll taken of the members of the equipment lender's association in 2006 found an overwhelming proportion of their members rejected ADR out-of-hand. Share a cocktail with a business finance lawyer and mention ADR and you will be regaled with stories of arbitration proceedings run amok or fear of 'split the baby' decisions by arbitrators that wouldn't recognize a security interest if it introduced itself.

Under this situation, why should lenders, borrower and their counsel care about ADR? Simply because ADR is immensely powerful and has the potential to simplify, streamline and substantially reduce the cost of resolving commercial finance disputes.


More...

Earth, Wind and Soybeans: The State of Alternative Energy Finance
Arthur A. Cohen, Haynes and Boone, LLP

Alternative energy is one of the hottest topics in the news, and the Commercial Finance Committee is right in the middle of this important issue, as the sponsor of a major CLE program at the Spring Meeting in Dallas this year. On Friday, April 11, 2008, 10:30 a.m. 12:30 p.m., we are co-sponsoring a CLE program called "Earth, Wind and Soybeans: The State of Alternative Energy Finance." This program will look at the current state of the finance market for alternative/renewable power, how and why things have changed over the last year and where the market is going in the months and year ahead.


More...

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  Committee on Commercial Finance: Subcommittee, Task Force and
  Liaison Reports
   
Subcommittee on Aircraft Financing
Michael K. Vernier, Chair, Peter B. Barlow, Vice Chair

We have an exciting program of speakers and panels this spring. The Treasurer of Southwest Airlines will join us to discuss Southwest's approach to aircraft financing in these turbulent times. We have a panel of lessors' representatives that will discuss leasing opportunities and challenges in the Asian markets. We also will have an update on recent aircraft financing developments in Ireland.

FAA Aeronautical Center Counsel will provide an FAA update, and we expect that Kerry Long, the FAA Chief Counsel (and a long-time member of our Subcommittee), will be on hand to introduce some of his Regional Office staff. We will have an update on Cape Town International Registry issues from our representatives on the International Registry Advisory Board and a discussion of FAA and Cape Town filing and registration issues from Oklahoma City counsel. We also will have more detailed discussions of issues arising with respect to FAA recordation of artisan liens and Cape Town registration of lease assignments.

Thursday morning, April 10th, we have a tour of Southwest Airlines at Love Field. We will have an opportunity to tour Southwest's Headquarters and dispatch operations and, as time and availability permit, certain training and maintenance facilities. This is a great opportunity to get "up close and personal" with this unique airline's operations. Thursday evening, April 10th, our Subcommittee dinner will be held at the restaurant Dallas Fish Market. The menu at this lively newcomer has an "invigorating perspective" that makes it one of the "most promising" new restaurants in Dallas.
Our dinner will be held in the private Banquet Room at the restaurant, beginning at 7:00 p.m.



Subcommittee on Creditors' Rights
Carolyn P. Richter, Chair, Shannon Lowry Nagle and Elizabeth M. Bohn, Vice Chairs

We have a great topic lined up for our subcommittee meeting in Dallas. We hope you can join us. Our topic is "Repurchase Agreements: Extending Credit Without Risking a Trip to Bankruptcy Court (and Limitations that may Foil that Goal)."

This program will discuss the benefits repurchase agreements offer to a secured creditor, limitations imposed by the Bankruptcy Code and the courts in recent bankruptcy cases, and pitfalls to be aware of in documenting a repurchase transaction. The panel will also explore the benefits of structuring a transaction as a repurchase rather than a secured loan to allow the creditor to avoid the automatic stay in levying against a variety of asset types, beyond those traditionally seen in repurchase transactions. The impact of the UCC and state law foreclosure rules will also be discussed. Come and learn about what may be the next wave in commercial finance and whether that trend may lead courts to recharacterize certain types of repurchase agreements as disguised loans.

Our speakers are Gerald C. Bender, a partner with O'Melveny & Myers LLP in New York, and Lyman R. Paden and James W. Robertson, partners with Locke Lord Bissell & Liddell LLP in Houston.

We will meet on Thursday, April 10, 2008, from 1:00 p.m. – 2:30 p.m.

Last November, we met at the National Conference of Bankruptcy Judges, which was in Orlando, Florida. Our meeting focused on claims trading in bankruptcy, including issues negotiated between a buyer and a seller, and the new Enron decision in which the appellate court did not allow equitable subordination of a lender's claim to extend to third parties who bought the lender's claims.



Subcommittee on Cross-Border and Trade Financing
Daryl Clark, Chair

At the upcoming Spring meeting of the American Bar Association in Dallas, our subcommittee will hold a joint meeting with the International Commercial Law subcommittee of the UCC Committee. This meeting will be held on Friday, April 11, from 10:00 a.m. to 10:30 a.m. and will follow the International Coordinating Committee and Commercial Finance Committee program on UNCITRAL to be held from 8:00 a.m. to 10:00 a.m.

Following the Spring meeting, our subcommittee will be participating in the Global Business Law Conference to be put on by the Business Law Section of the American Bar Association on May 29-30 in Frankfurt, Germany. This will be the first conference of the Business Law Section to be held outside of the United States. Our subcommittee will be co-sponsoring with the UCC International Commercial Law subcommittee a program that will focus on recent developments in tax law in Canada and other foreign jurisdictions and the impact of such developments on the finance and M & A practices in those jurisdictions. Further updates on this program will be made available to our subcommittee members.

Hope to see many of you in Dallas in April and in Frankfurt in May!



Intellectual Property Financing Subcommittee
Matthew W. Kavanaugh, Chair, John E. Murdock, III, Vice Chair

The Subcommittee will hold a meeting at the ABA Business Law Section Spring Meeting in Dallas on Friday, April 11, 2008, 4:30 - 6:00 p.m. The topic will be "Hot IP Lien Issues: USPTO Filing Project, URLs as Collateral, and UNCITRAL IP Collateral Project." Professor Tom Ward will speak on the USPTO lien filing project and other IP current developments. Matt Kavanaugh will present a paper co-authored by Chris Dorman on internet domain names as collateral. Professor Neil Cohen and Kiriakoula Hatzikiriakos will provide an update on the UNCITRAL Secured Transactions Guide proposed IP annex.



Subcommittee on Lender Liability
Jeffrey W. Kelley, Chair, Mathew S. Rotenberg, Vice Chair

The Lender Liability Subcommittee will host a program at the Spring Meeting, "Recent Updates: Lender Liability Theories, Trends and Defenses." This panel (Ed Dobbs of Parker, Hudson, Rainer & Dobbs LLP and Vivieon Kelley of Troutman Sanders LLP) will help us identify and negotiate the lender liability issues that are often encountered in commercial and consumer transactions. They will analyze the most common lender liability claims and examine recent case-law and emerging trends in theories of liability. Topics will include: bank group liability; securities law violations; deepening insolvency developments; antitrust issues and consumer law theories.



Subcommittee on Loan Documentation
Jeremy S. Friedberg, Chair, Bobbi Acord, Stuart D. Ames and Scott Lessne, Vice Chairs

"Insurance and Equity and Everything Else…" will be our topic at the Spring 2008 Loan Documentation Subcommittee meeting.

Jeremy Friedberg, Bobbi Acord and Scott Lessne will explore documentation and diligence requirements relating to "non-uniform" collateral – insurance, equity interests and "everything else" – including certificates of deposit, boats, aircrafts, motor vehicles, intellectual property, farm products, regulated collateral (liquor, firearms, pharmaceuticals).

Please join us on Thursday April 10, 2008 at 1:00 p.m.– 2:30 p.m.



Subcommittee on Loan Workouts
Steven B. Soll, Chair, Cathy L. Reece, Vice Chair

Steven B. Soll, a Member at the Firm of Otterbourg, Steindler, Houston & Rosen, P.C., and Cathy L. Reece, a Member at the Firm of Fennemore Craig, P.C., serve as Chair and Vice-Chair of the Subcommittee. Steve and Cathy have organized a panel presentation for the Spring Meeting in Dallas, Texas entitled: Current Issues and Developments in Dealing with Distressed Real Estate. The panel will be moderated by Steve and will include presentations by Cathy, William K. Snyder, Managing Partner of CRG Partners and Daren Wayne Perkins, Vice President/Assistant General Counsel, JPMorgan Chase & Co. The panelists will explore the major issues, concerns and alternative strategies which arise in working out defaulted real estate loans in a diverse range of real estate transactions.

Steve, Cathy and John R. Clemency, a Partner at Greenberg Traurig, LLC, presented a panel at the Fall Commercial Finance Committee Meeting in Phoenix entitled: On the Downturn: Transaction Issues in Loan-to-Owner, Workouts and Foreclosures on Equity Interests which panel was moderated by James Schulwolf, a Member of the Firm of Shipman & Goodman LLP. Steve and Cathy desire to organize panel presentations by the Subcommittee on a regular basis. Active participation by Subcommittee members is sought, and we welcome suggestions for program topics, as well as volunteers for future panels. Please contact Steve at 212-661-9100/
ssoll@oshr.com or Cathy at 602-916-5343/creece@fclaw.com with your thoughts, comments and suggestions.



Subcommittee on Real Estate Financing
Kathleen J. Hopkins, Chair, Edgel C. Lester, Jr., Vice Chair

At the Spring meeting we have decided to recap and continue the discussion started at the CFA meeting on "Avoiding Jail, Disbarment and Other Bad Consequences: What You Need to Know About Real Estate Collateral". We will conduct our meeting/program on Friday, April 11, 2008 from 3:00 p.m. - 4:30 p.m. in the Media Room on the Mezzanine Level of the Anatole Hilton (Dallas). Our subcommittee vice-chair Ed Lester from Carlton Fields will continue our moderated discussion, with our distinguished panel including Ray Carpenter from Holland & Knight (a state and federal tax law guru), Wilhelmina F. Kightlinger, Vice President Florida Commercial Underwriting at Stewart Title (our title insurance guru), Kevin Napper from Carlton Fields (a truly wise man on issues of white collar criminal law) and Norm Powell from Young Conaway Stargatt & Taylor (all-knowing master of issues relating to ethics and unauthorized practice of law).



Subcommittee on Securitization and Derivatives
Teresa Wilton Harmon, Chair, Anthony R.G. Nolan, Vice-Chair

The Securitization and Derivatives Subcommittee of ComFin will meet in Dallas, in a joint meeting with the Structured Financings Subcommittee of the Federal Regulation of Securities Committee and Securitization of Assets Subcommittee of the Developments in Business Financing Committee. Topics for discussion will include recent developments in securities law liability and mortgage securitization cases. The Subcommittee will also meet in New York City for the ABA annual meeting this summer. We hope to see you there as well as in Dallas.

The subcommittee has also been active in preparing a securitization version of the ABA Model Deposit Account Control Agreement – many thanks to Eric Marcus for his work in this regard.

Please contact Teresa Harmon or Anthony Nolan if you would like to become more involved in the Subcommittee. We need more input on programs and ongoing activities. Future projects in need of volunteers include our effort to encourage securitization lawyers to become more involved in pro bono activities and the possible launch of a securitization and derivatives listserv on the ABA's website.



Subcommittee on Syndications and Lender Relations
Anthony R. Callobre, Chair, Gary D. Chamblee and Michelle White Suarez, Vice Chairs

The Syndications and Lender Relations Subcommittee of the Commercial Finance Committee and the Syndicated Bank Financing Subcommittee of the Developments in Business Financing Committee will present a joint CLE panel presentation entitled, "Syndicated Loan Market Update." The presentation will be held on Thursday, April 10, 2008 from 10:30 a.m. to 12:30 p.m. in connection with the Spring Meeting of the Business Law Section in Dallas. Bridget Marsh, Associate General Counsel of the Loan Syndications and Trading Association and a vice-chair of the Syndicated Bank Financing Subcommittee, will be the program moderator. Panelists will include Alex Spiro, Esq. of Bank of America, N.A. and Peter Wasserman, Esq. of JPMorgan Chase Bank, N.A. We anticipate that, given the current credit climate, this program will provide a very robust and topical discussion of the current state of and anticipated developments in market for syndicated loans.



Model Intercreditor Agreement Taskforce
Gary D. Chamblee, Chair, Alyson Allen, Christian Brose, Richard K. Brown, Robert L. Cunningham, Jr. and Jane Summers, Vice Chairs

The Model Intercreditor Agreement Task Force will meet at the Spring Meeting in Dallas on Friday, April 11, 2008 from 12:30 p.m. to 2:00 p.m. The meeting is open to all. The Task Force met last November in Scottsdale, Arizona for an all-day working session to discuss and revise the Model Intercreditor Agreement. A revised draft of the Model Intercreditor Agreement based on the discussions in Scottsdale will be available at the Spring Meeting. The Task Force was formed to develop a market-based form of intercreditor agreement for intercreditor arrangements between first and second lien institutional lenders holding liens on the same collateral. Second lien loans are usually structured as term loans, bear interest at a rate based on a margin above LIBOR and can offer a borrower an alternative to traditional unsecured mezzanine financing, without the need to issue stock warrants or other equity interests. With the credit crunch continuing and an economic downturn in the wind, the carefully negotiated arrangements between senior lien holders and junior lien holders represented by intercreditor agreements are likely to be severely tested over the next year both inside and outside of bankruptcy. The Task Force meeting will include a discussion of the latest draft of the Model Agreement, recent trends in second lien financing, the state of the second lien loan market, recent cases regarding the enforceability of intercreditor arrangements in bankruptcy and the effects of first lien/second lien loans on the ability of borrowers to successfully restructure their businesses.

New members are welcome. In particular, the Task Force would like to encourage in-house counsel at banks and other financial institutions to join the Task Force. We want to be sure that a broad perspective on first and second lien issues is reflected in the work of the Task Force. The Task Force website can be accessed at
http://www. abanet.org/dch/committee.cfm?com=CL190029.



ABA Section of Business Law Legal Opinions Committee: Cross-Border Opinion Initiative
Larry Safran

The Cross-Border Legal Opinions Subcommittee of the ABA Legal Opinions Committee is studying outbound legal opinions (opinions by U.S. counsel addressed to non-U.S. recipients) in cross-border transactions. As a result of this study, the Subcommittee may propose guidelines for such opinions. The ComFin Committee is participating in this project and is represented on the Legal Opinions Committee Cross-Border subcommittee.

At its meeting on January 31, 2008, the ComFin Committee was represented by Larry Safran and the following items were among the issues discussed with respect to outbound legal opinions:


More...



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  Committee on Uniform Commercial Code: Subcommittee and Task Force Reports
   
Subcommittee on Article 8
Howard Damstadter, Co-Chair and Meredith Jackson, Co-Chair

On Friday, April 11, 2008, the Investment Securities Subcommittee of the Uniform Commercial Code Committee will host three presentations. Norm Powell, a partner with Young Conaway Stargatt & Taylor, LLP in Wilmington, Delaware, will present Delaware's Clearer Path to Perfection. Sandra M. Rocks, counsel at Cleary Gottlieb Steen & Hamilton in New York, New York, will present Life Insurance Under the UCC and Perry Hicks, an Associate with Cadwalader, Wickersham & Taft in Charlotte, North Carolina, will present Concerns Arising from Issuers' Restrictions on Transfer on Securities in the Indirect Holding System.

Delaware's Clearer Path to Perfection will discuss Delaware's 2007 legislation enacted to provide additional methods of perfection of security interests and to limit the impact on perfection of conditions placed on the secured party's ability to direct disposition of the collateral. Life Insurance Under the UCC will discuss the treatment of life insurance policies under the Uniform Commercial Code, with particular focus on their inclusion as investment property through "financial asset" treatment. Concerns Arising from Issuers' Restrictions on Transfer on Securities in the Indirect Holding System will address the broad transfer restrictions on securities that underlie security entitlements. These transfer restrictions present attachment and perfection issues in transactions secured by pledges of security entitlements. Equity interests in hedge funds are often subject to these broad transfer restrictions and therefore, pledges of hedge fund equity pose unique challenges for the lenders, borrowers and counsel. This presentation will also provide potential solutions to the more common questions posed by counsel involved in such transactions while highlighting the dire consequences of failing to address these issues.
 



Subcommittee on General Provisions and Relations to Other Law
Kristen David Adams, Chair

The General Provisions and Relations to Other Law Subcommittee will be meeting in Dallas at the Business Law Section's Spring Meeting, on Friday, April 11 from 11:00 am until noon in the Ming Room in the Tower of the Hilton Anatole, Mezzanine Level. The topic will be "Are We Giving Good Faith a Bad Name?" There will be a panel discussion on the 2001 revision to Article One's definition of good faith, which extended the "commercial reasonableness" standard to nonmerchants and has been nonuniformly enacted by a number of jurisdictions. The discussion will be primarily geared toward addressing the following issues: (1) The purpose behind the change; (2) why some legislatures have balked at the change; and (3) what the language should or should not mean.



Subcommittee on Letters of Credit
George Hisert, Chair

The Letter of Credit Subcommittee is scheduled to meet from 12:30 p.m. to 2:00 p.m. on Friday, April 11 in Dallas at the ABA Spring Meeting of the Business Law Section. The tentative agenda will include the following items:

  • Governmentally Mandated Forms of Letters of Credit;
  • Recent case developments;
  • Revisions to the Official Commentary to ISP98;
  • Drafting of LCCTerms (Letter of Credit Contract Terms) that can be used in connection with letter of credit payment clauses or assurance clauses in contracts. This is intended to be a set of industry terms analogous to those contained in INCOTERMS with regard to shipping times. The project is being spearheaded by the Institute of International Banking Law & Practice; and
  • Potential model Reimbursement Agreement.



Subcommittee on Payments
Stephen C. Veltri, Chair, Greg Cavanagh, Vice-Chair

The Subcommittee on Payments will participate in a presentation titled "Deposited Check Truncation – Check or Electronic Payment?" at the upcoming Spring meeting of the American Bar Association in Dallas. The presentation will take place on Friday, April 11th at 9:00 a.m. The distinguished panelists will discuss the proposed NACHA check truncation pilot program and whether it is a model for payment law convergence or simply a cheaper means of collecting low dollar value checks.



Subcommittee on Sale of Goods
Scott J. Burnham, Co-Chair, Keith A. Rowley, Co-Chair

Please join our Subcommittee at the upcoming Spring meeting of the American Bar Association in Dallas, for the following presentation-- "Electronic Sales Contracts: Even the Simple Can Be Complex." This program will explore developments in electronic contracting law and practice, emphasizing the legal, practical and policy issues in contracting electronically to sell goods. The presentation will take place on Thursday, April 10th at 10:00 a.m.



Task Force on Forms Under Revised Article 9
Cindy J. Chernuchin, Chair
Our Task Force has been diligently working to prepare a first draft of all documents to be included in the 2nd Edition of Forms Under Article 9. The forms should be posted on the ABA site by the end of February. Please review these documents and share your comments at the Spring meeting in Dallas. If you have additional documents you wish to be included in the book please bring these documents to the Spring meeting in Dallas.

Task Force on State Certificate of Title Laws
Alvin C. Harrell, Chair, Lee Anne Leathers-Lutz, Vice Chair
The Task Force is nearing completion of the second edition Compendium of State Certificate of Title Laws, to be published by the ABA Section of Business Law. The Compendium will describe each state's certificate of title law, how it works, and its relation to UCC Article 9 and the Uniform Certificate of Title Act (UCOTA).

The Task Force is also working with NCCUSL as it considers expansion of UCOTA to cover watercraft and manufactured housing.


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  Joint Subcommittee Report
   
Subcommittees on Secured Lending (ComFin) and Secured Transactions (UCC)
Katherine Simpson Allen, Chair (ComFin), Leianne S. Crittenden, Chair (UCC), Wansun Song, Vice-Chair (ComFin), Pauline M. Stevens, Vice-Chair (UCC)

The Secured Lending Subcommittee of the Commercial Finance Committee and the Secured Transactions Subcommittee of the UCC Committee will hold a joint meeting at the Spring Meeting in Dallas on Saturday, April 12, 2008 from 8:30 a.m. to 10:00 a.m. We look forward to an interesting and timely discussion of "The ABC's of Assignments for the Benefit of Creditors," to be presented by our panel of experts: James C. Chadwick (moderator) and Brent R. McIlwain of Patton Boggs LLP, Michael W. Hilliard (moderator) and Jennifer D. Knapek of Winstead PC and Ronald Winters of Alvarez & Marsal.

As news of an economic downturn becomes more prevalent, we are all seeking to improve our skill sets. Here is an opportunity to add to your repertoire the long-established common law procedure known as assignment for the benefit of creditors. This kind of procedure is often significantly less costly and more flexible than a bankruptcy proceeding, and may allow creditors to achieve a greater recovery more quickly than in bankruptcy. After providing a broad overview of this state procedure, our panel will compare the ABC procedure with the bankruptcy process, focusing on common issues raised by both approaches. The presentation will place an emphasis on practical considerations for a secured creditor's effective utilization of this tool.

We will also be looking for suggestions as to future Subcommittee projects and programs. Please join us in Dallas!



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  Joint Task Force Reports
   
Joint Task Force on Commercial Finance Terms
Carl Bjerre and Meredith Jackson, Co-Chairs

The Commercial Finance Terms Taskforce has embarked on a plan to compile and publish a "dictionary" of terms used in commercial finance transactions. We are still soliciting additional finance terms for inclusion. Our first meeting is scheduled for Dallas at 10:00 a.m. on April 12, 2008. Please join us and bring any resource materials that include definitions of financing terms! We look forward to creating the last word in financial jargon.



Joint Taskforce on Deposit Account Control Agreements
R. Marshall Grodner, Marvin D. Heileson, Oliver I. Ireland, John D. Pickering and Edwin E. Smith, Co-Chairs
After the Joint Task Force on Deposit Account Control Agreements unveiled its new form of deposit account control agreement at the Section's 2006 Spring meeting in Tampa, Florida, and the initial report of the task force was published in 61 The Business Lawyer 745 (2006), the task force began to develop a series of inserts designed to accommodate transactions other than the paradigm transaction originally contemplated by the deposit account control agreement (the "DACA") developed by the task force. These transactions include those involving a standing disposition instruction, lock box arrangements, a security interest in a time deposit or other deposit account not payable on demand, the blocking of the debtor's access to the deposit account without a standing disposition instruction, a deposit account from which funds are automatically swept into an omnibus investment account, and first and second lien arrangements over the same deposit account.


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Joint Taskforce on Filing Office Operations and Search Logic
James D. Prendergast and Paul Hodnefield, Co-Chairs

The Task Force on Filing Office Operations and Search Logic has been formed to address issues relating to filing and searching under Article 9 of the Uniform Commercial Code. The Task Force will cooperate closely with the International Association of Commercial Administrators ("IACA") to (1) collect and disseminate information on how filing systems operate, with particular attention to differences among individual filing offices; (2) work with IACA and individual filing offices to develop, modify, and implement rules that will help filing offices perform their duties and serve their constituencies; (3) communicate IACA's advice on how best to use the services of filing offices; and (4) make recommendations on whether and how the UCC should be amended to make filing and searching easier, uniform, and more certain to yield the best results. In addition to the development of a cooperative and joint approach between the ABA through the Task Force and IACA, the Task Force will also work with the Internal Revenue Service and the appropriate Committees of the Congress with regard to the pending legislation to establish a central filing system for federal tax liens.


More...

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  UCC Scorecard
   
UNIFORM STATE LAWS SCORECARD 
Survey of Adoptions of Revised Official Text of the UCC
As of February 1, 2008



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  Committee Leadership Rosters
   



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