Presenting a live 90-minute webinar with interactive Q&A

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1 Presenting a live 90-minute webinar with interactive Q&A UCC Security Interests in Payment Intangibles: Intercompany Loans, Debt Obligations and Promissory Notes Perfecting Interests In Financial Instruments and Contractual Payment Obligations TUESDAY, MARCH 3, pm Eastern 12pm Central 11am Mountain 10am Pacific Today s faculty features: Barry A. Graynor, Special Counsel, Cooley, San Francisco Dean T. Kirby, Jr., Principal, Kirby & McGuinn, San Diego Professor Thomas E. Plank, Joel A. Katz Distinguished Professor of Law, University of Tennessee College of Law, Knoxville, Tenn. Steven O. Weise, Partner, Proskauer Rose, Los Angeles The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions ed to registrants for additional information. If you have any questions, please contact Customer Service at ext. 10.

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4 UCC Security Interests in Payment Intangibles: Intercompany Loans, Debt Obligations, and "Promissory Notes" Barry Graynor Cooley LLP Dean T. Kirby, Jr. Kirby & McGuinn, A P.C. Professor Thomas E. Plank U. Of Tennessee College of Law Steve Weise Proskauer Rose LLP

5 Outline Benefits Definitions + Examples Characterization Types of transactions Creation Perfection Priority Enforcement 5

6 Benefits of treatment as "payment intangible" Automatic perfection for sales No public record Can't be primed by possession 6

7 Definition Reason for creating Core definition Expansion of "accounts" 7

8 Examples Loan agreement "Note" Electronic note Participation Intercompany loan entered on books Rights with respect to credit cards 8

9 Scope characterization Differentiate from: Notes (paper) Chattel paper Accounts Debt securities 9

10 Chattel paper Splitting the Atom? Chattel Paper is a record that evidences... (among other things) Both a monetary obligation and a security interest like a consumer installment purchase contract, or A lease of specific goods like a commercial equipment lease What happens when parties purport to separate the monetary obligations of the buyer or lessee from other obligations which are contained in the record, or from the record itself? Are the severed payment obligations: Accounts? Payment intangibles? Still chattel paper? 10

11 Electronic notes Control of "transferrable records" under: UETA E-Sign 11

12 Creation by agreement Security agreement Sales agreement (for sales) 12

13 Creation automatic Ancillary rights Guaranty Letter of credit rights Underlying mortgage Underlying security agreement 13

14 Restrictions on transfer Sales v "pledge" 9-406(e) (b) Effect of characterization 14

15 Perfection automatic Automatic for sale Stripped payment rights? 15

16 Perfection filing Filing Should filing be dropped? 16

17 Perfection other methods Not by possession (even if called a "note") Not by control Automatic for ancillary rights Proceeds 17

18 Priority Filing Filing help in sales? Not by possession (even if called a "note") Possibly by control? Under UETA or E-SIGN Transferable records? Proceeds Negotiable proceeds 18

19 Stripping to create "payment intangible" In re Commercial Money Center, Inc. 350 B.R. 465 (Bankr. App. 9th Cir. 2006) Animal, Vegetable or Mineral? In re Commercial Money Center, 39 U. Tol. L. Rev. 861 (2008) Classifying the Right to Rental Payment Streams Stripped Off a Lease, 86 Tex. L. Rev. 857 (2008) 19

20 Enforcement - sale Sale Restrictions on transfer ( 9-406(e) (revised)) Commercial reasonableness issues 20

21 Enforcement collection Notice to account debtor Notice to seller/borrower? Duty of commercial reasonableness? 21

22 Enforcement account debtor defenses Account debtor defenses Hell or high water term Offsets 22