Read the attached article on UCC Article 9 Sales and submit a summary of the article. It should be between three to five paragraphs long and outline the steps that go into an Article 9 sale. Because it all relates back to the UCC, you can refer to any sections of the UCC but do not have to quote them. Please note that you have one attempt at the assignment. It should be a summary and, therefore, in your own words.Sales Under Article 9 of the Uniform Commercial Code . . . . . . . . . . . . . . MATTHEW A. OLINS Duane Morris LLP Among the remedies that Article 9 of the Uniform the subject of the disposition." (1) and (2) above are Commercial Code provides to a secured party is the right, generally limited to sales of fungible property that can be under Section 9-610, to sell personal property collateral sold through recognized exchanges. after default.' This non-judicial remedy allows a secured party to monetize its collateral and apply the proceeds to Section 9-627(c) provides that a sale is commercially its debt, or to credit bid all or a portion of its debt and reasonable if approved in judicial proceeding or by a bona purchase title to its collateral. Article 9 provides flexibility fide creditors' committee, a representative of creditors, to secured parties as to the form of the sale. It may be or an assignee for the benefit of creditors. However, public or private, by one or more contracts, in one or more such approvals are not required to prove commercial parcels, at any time or place, and on any terms, so long as it reasonableness and may even be uncommon in sales s commercially reasonable. A sale conducted pursuant to under Article 9. The fact that a higher price may have been the provisions of Article 9 transfers all of the debtor's rights obtained by another method or at a different time does in the collateral to the purchaser, discharges the security not, by itself, mean that the sale was not commercially interest under which the sale is made, and discharges junior reasonable security interests (other than any liens that applicable law provides are not discharged, see, e.g., Section 9-617(a)(3) Next, the secured party must send an authenticated as adopted by applicable state law). notification of disposition. Section 9-613 sets forth the required contents of the notice, and also provides the basic One of the first steps that a secured party should take form of notice that the secured party may adapt for its sale. when selling its collateral is to review the default and Section 9-611 sets forth the parties that must be notified, remedy provisions of its loan documents. The secured which include the debtor, any secondary obligor, any person party should confirm that it has complied with all who sent the secured party an authenticated notification applicable notice and grace periods before commencing of a claim of interest in the collateral, and other secured enforcement proceedings. The secured party should also parties with perfected security interests as of ten days review the granting language of its security agreement to before the notification date who perfected either through confirm the extent of the collateral, and confirm that its the filing of a financing statement or by other applicable financing statement has not lapsed and all the information law. In order to comply with the notification requirement to it contains is correct. Finally, if the secured party is a party other secured parties who have filed financing statements, to any intercreditor agreement, it should confirm that it has Section 9-611(e) provides (in language that should be complied with all of its applicable provisions. clarified) a "safe harbor" setting forth the procedure for ordering a search of the records. Whether the secured When planning the sale, a secured party should always party sends the notice of disposition within a reasonable consider its duty of commercial reasonableness. Indeed, period of time is a question of fact; however, Section 9-612 as Section 9-610(b) states, "[elvery aspect of a disposition provides a "safe harbor" for notices sent after default and of collateral, including the method, manner, time, place, ten days or more before the earliest time of the sale. The and other terms, must be commercially reasonable." secured party should also consult its security agreement Commercial reasonableness is a question of fact. However, for any alternative notice requirements. If the collateral with respect to the manner of the sale, Section 9-627(b) is perishable, threatens to decline speedily in value, or is does provide some specific examples of commercial of the type customarily sold on a recognized market, the reasonableness including sales made: "(1) in the usual ification of disposition otherwise required by Section manner on any recognized market; (2) at the price current 9-611 is unnecessary. in any recognized market at the time of the disposition; or (3) otherwise in conformity with reasonable commercial When determining the type of sale, the secured party practices among dealers in the type of property that was should always consider what is most commercially reasonable. In some situations, it will be a public sale, All article and section references are to the Uniform Commercial Code. which is open to the public and provides the opportunity This article is intended to provide a brief, general summary of, and some for competitive bidding. For such sales, the secured party suggestions for, the sale process under Article 9 for non-consumer goods should provide public notice, such as advertising the transactions (transactions involving consumer goods have certain separate requirements). Practitioners should consult all applicable law, including the sale in one or more appropriate publications. Notifying Uniform Commercial Code as adopted in their states, before conducting a sale other potentially interested parties of the sale may also be under Article 9. appropriate. However, there may be situations where a 10 Vol. 31 No. 2 - 2017 AIRA Journalprivate sale will result in a higher price; therefore, so long as is conducted by a junior lien holder; however, the senior it is commercially reasonable, the sale may be private. For lien will not be extinguished nor will a senior lien holder such private sales, the secured party will want to be able lose its other rights with respect to the collateral (including to prove that it made reasonable efforts to find interested its right to repossess and sell) once it is transferred to the buyers. If the collateral is of a kind that is customarily sold transferee unless the senior lien holder consents. A similar on a recognized market or the subject of widely distributed result arises in a sale by a lien holder of equal priority. standard price quotations, the secured party may even purchase it at a private sale; however, these transfers are A transfer statement, made pursuant to Section 9-619, rare and are usually made under the strict foreclosure entitles the transferee to the transfer of record of all rights procedures of Article 9. It should also be noted that of the debtor in the collateral that it purchased in any Section 9-610(d) provides that contracts for sale include official filing, recording, registration, or certificate-of-title certain warranties that are included by operation of law system covering the collateral. The transfer statement is a in voluntary dispositions. Significantly, however, Sections record, authenticated by the secured party, stating: (1) that 9-610(e) and (f) provide instructions for how the secured the debtor has defaulted in connection with an obligation party may disclaim such warranties. secured by specified collateral; (2) that the secured party If the sale is a public auction, the secured party will generally has exercised its post-default remedies with respect to the want a court reporter present to generate a transcript of collateral; (3) that, by reason of the exercise, a transferee the proceeding. The secured party will have flexibility in has acquired the rights of the debtor in the collateral; and where, when, and how the auction is conducted, so long as (4) the name and mailing address of the secured party, it is commercially reasonable. debtor, and transferee. Section 9-615 provides the waterfall for the proceeds of Upon completion of its sale, the secured party is free to the sale after receipt by the secured party. First they are pursue any other remedies available to it by law, including applied to the reasonable expenses of the secured party bringing separate actions for deficiency against the (including attorney's fees and legal expenses if provided obligors. for by agreement and not prohibited by other law), second is to the satisfaction of the obligations secured by the ABOUT THE AUTHOR security agreement (see Section 9-615(a) for consignor Matthew A. Olins provisions), third is to subordinate security interests in Matthew Olins is a partner in the certain circumstances, and fourth is to the debtor subject Chicago office of Duane Morris LLP. Mr. to the exceptions of Sections 9-615(e) and (f). In order Olins practices in the areas of business for a holder of a subordinate security interest to receive reorganization, financial restructuring, proceeds from the sale from the secured party after commercial finance, secured transactions, and creditors' rights. He represents lenders, payment of senior claims, it must make an authenticated special servicers, and various types of other demand upon the secured party for proceeds prior to their business organizations in loan workouts, distribution by the secured party. If the proceeds of the business bankruptcy cases, commercial sale are insufficient to satisfy the debt, subject again to the finance transactions, commercial foreclosures, and litigation. Mr. Olins exceptions of Sections 9-615(e) and (f), the obligor is liable also represents business organizations in to the secured party for the deficiency. Section 9-615 does reorganizations and liquidations. not require the payment of senior lien holders if the sale AIRA Journal Vol. 31 No. 2 - 2017 11