Spencer Fane LLP Logo

Commercial Lending

The “Name Game” Continues for Locating Notices of Federal Tax Liens

Under Article 9 of Uniform Commercial Code, security interests in most personal property securing business debt are perfected by filing a UCC financing statement in the appropriate office that provides the “name of the debtor,” among other information. UCC §9-502(a). What is the “name of the debtor” has been the subject of two major revisions to UCC Article 9. The 2001 revisions adopted an “only if” answer to this question for registered organizations (corporations, limited partnerships, limited liability companies and certain registered business trusts). Under that revision, the only correct name for a UCC filing against a registered organization is “… the name of the debtor indicated on the public record of the debtor’s jurisdiction of organization….” UCC §9-503(a)(1).

Adventures of the Missouri No-Oral-Credit-Agreement Statute; Governor Signs Corrective Amendment in SB 100

The Missouri credit agreement statute of frauds has had uneven interpretations by the courts.  It has been amended twice to overrule appellate court decisions that limited its obvious intent, which is to eliminate all claims by borrowers and guarantors(or lenders) that oral promises or commitments had been made or breached or that there were representations at variance with written loan agreements, promissory notes, guaranties or similar documents.  It was originally adopted as § 432.045, R.S.Mo., in 1990. 

The New Uniform Commercial Code Article 9 Rules To Determine An Individual’s Name For Filing Financing Statements

Under Article 9 of the Uniform Commercial Code security interests in most personal property securing business debt are perfected by filing a UCC financing statement in the appropriate central filing office. With few exceptions, such as perfection of purchase money security interests, the first creditor to file a correctly prepared financing statement in the proper location has priority over a security interest perfected in the same property by a later filing. Prospective lenders search the UCC filing office records under the “name” of the proposed borrower to confirm that there is no indication on file that any other party may have a prior perfected security interest against the proposed borrower covering the offered collateral. Filing offices index UCC files by the debtor’s “name.”

Practical Implementation of the CFPB’s New Mortgage Rules: Here is Where You Should Start

In the past year, the CFPB has issued 1,097 pages of final mortgage rules. 
I consider myself to be an efficient reader, and it took me roughly three and a half minutes to read just one of those pages.  At that rate, a bank compliance officer would need almost 64 hours of uninterrupted time just to read the text of the new regulations. 
If it takes 64 hours just to read the new rules, you can imagine how much more time will be needed to understand, internalize, apply and implement.  It’s staggering.  And with the January 2014 effective date looming, many banks are beginning to feel the strain. 

Perfecting a Security Interest in a Limited Liability Company Ownership Interest – Not a Simple Task

Many loans to small (and not-so-small) businesses include the requirement that the owners pledge to the lender their ownership interests in the prospective borrower. When the borrower is a corporation, the standard approach under the Uniform Commercial Code calls for the lender to perfect its security interest by obtaining physical possession of the certificates representing the stock, along with a “stock power” (separate endorsement by the owner that would allow the lender to transfer the stock to any purchaser in foreclosure). So long as the lender retains possession, it has a perfected, first-priority security interest in the pledged stock.

The Perils of Invoking “Insecurity” Default

Although by their literal terms such default provisions allow the lender to take drastic action (acceleration of debt; foreclosure on collateral) as long as the lender “believes” itself insecure, invoking such default provision is fraught with peril.

New Legislation Proposes Change to Perfection of Security Interest in Vehicles

The Missouri legislature recently passed legislation that will impact the manner in which a lender perfects a security interest in vehicles held for lease by a debtor engaged in leasing activity.  Banks should be aware of this change in order to ensure that they are properly perfecting their security interests in vehicles held for lease.

U.S. District Court, Western District, Predicts Change in Missouri Foreclosure Deficiency Law

A recent Missouri Supreme Court case, First Bank v. Fischer & Frichtel, Inc., decided April 12, in which the Court, en banc, refused the urging of a borrower to change the Missouri century-old common law rule of basing the amount of deficiency after real estate foreclosure on the price paid in the foreclosure sale.  Borrower in that case asserted that the rule be changed to base the deficiency on the property’s fair market value, regardless of the amount paid (normally, “bid-in” by a credit bid by the foreclosing lender).

After the Gut Punch, Regional Banks Back at Work

Over the past five years, loans to businesses, big and small, tumbled. There were many events that caused the tightening of credit both globally and locally, but to understand where we are we must remember where we were.