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Commercial Litigation Bankruptcy Litigation Securities Litigation

Secured Creditors Beware of Your Descriptions, Nomenclature and Terminations

Secured creditors can learn a great deal from a few recent bankruptcy cases involving the Uniform Commercial Code that remind us that the “devil is in the details.” These cases show that it is unrealistic to expect forgiveness by a court after a misstep involving Article 9 of the UCC.

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Secured creditors can learn a great deal from a few recent bankruptcy cases involving the Uniform Commercial Code that remind us that the “devil is in the details.” These cases show that it is unrealistic to expect forgiveness by a court after a misstep involving Article 9 of the Uniform Commercial Code (UCC). Once a debtor files bankruptcy, Bankruptcy Code Section 544(a), also known as the “strong arm clause,” provides the trustee or the debtor the rights of a creditor with a judicial lien on the property of the debtor as of the date of the bankruptcy petition. See, Legislative History, Section 544(a).

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