• 2010 Amendments To UCC Article 9 Now In Effect
  • July 24, 2013 | Author: Nicholas R. Pagliari
  • Law Firm: MacDonald, Illig Jones & Britton LLP - Erie Office
  • On July 1, 2013, the 2010 amendments to Article 9 of the Uniform Commercial Code, Secured Transactions (the "2010 Amendments"), took effect in Pennsylvania.  Although the 2010 Amendments are not nearly as extensive as the amendments that took effect in 2001, there are a number of provisions that secured creditors should be aware of.

    The most significant changes were made to Section 9-503, titled Name of Debtor and Secured Party.  This section now includes the following specific requirements for identifying the name of the debtor:

    • An individual debtor’s name is the name listed on a valid (i.e. not expired) driver's license issued to the debtor by the Department of Transportation. If the debtor does not have a driver's license, the correct name is the name listed on an identification card issued to the debtor by the Department of Transportation. If the debtor has neither a driver's license nor an identification card, the debtor’s name is his/her surname and first personal name.

    • The name of a debtor that is a registered organization is the name listed on the organization's most recent public organic record (e.g. articles of incorporation) on file with the Secretary of State. A trade name is not a debtor's name for purposes of Article 9.

    • The name of a debtor that is an estate, is the name of the decedent.  The financing statement must indicate that the collateral is being administered by a personal representative. This prior rule required a creditor to identify the collateral as part of an estate.

    • The name of a debtor that is a trust, which is not a registered organization, is the name of the trust as stated in the organic record of the trust (i.e. the declaration of trust or similar agreement). If a name is not specified, the name of the debtor is the name of the settlor or testator, and the financing statement must include any additional information as may be necessary to distinguish the trust from other trusts having one or all of the same settlors or testators.  The financing statement must also indicate that the collateral is held in trust.

    Additional changes to Article 9 include:

    • Section 9-316(h): continued perfection in after-acquired collateral for a period of four months when a debtor moves to a new state or changes its state of registration;

    • Section 9-316(i): continued perfection in after-acquired collateral when a “new debtor” becomes subject to the original debtor’s security agreement (e.g., when there is a merger or an acquisition);

    • Section 9-516(b): fewer bases for the rejection of a financing statement by the filing office; and

    • Section 9-518(c): the ability of a creditor to file an “information statement” (rather than just the debtor) if the creditor believes that a financing statement or termination statement is inaccurate or improperly filed.

    The 2010 Amendments provide the following transition rules: (1) a financing statement properly filed before the effective date of July 1, 2013 will remain effective until it expires at the end of five years; and (2) if, at that time of expiration of a financing statement, the financing statement does not comply with the 2010 Amendments, an amended financing statement must be filed.