Categorical description of collateral.

Participant: Excuse me, Mr Kellogg, I have a question. Why not

use a general description, such as 'all personal property of

the debtor'? Wouldn't that be simpler?

John Kellogg: That's a good question. What you are referring to

is known as a 'blanket lien'. This is problematic, because a

Blanket lien creates a roadblock to any further secured

Borrowing for the company.

Right. On to step 3: confirm that the debtor has rights in

The collateral. Counsel should confirm that the debtor has,

Or will acquire, rights in the property. If in doubt, ask the

Debtor to provide documentation supporting its claim to

Ownership, such as bills of sale, invoices and the like. The

Debtor may also agree to subject its after-acquired property

To the security interest. In such a case, counsel should

include a phrase such as 'now owned or later acquired' to

Describe the property.

The next step is step 4: confirm that the secured party has

Audio transcripts E

Given value. In the typical lending relationship. where the

Lender either agrees to make a loan or actually advances

Funds, the requirement of value is easily met.

OK. Now we have step 5: draft the security agreement. The

UCC requires that it's in writing. It should identify the debtor

and provide a signature block. Of course, there's quite a bit

more to be said here. I'll be going into more detail on the

Subject of drafting later.

Step 6 is to 'authenticate' the security agreement. In most

cases, this probably means that the debtor's authorised

Representative will put pen to paper and sign the security

Agreement. Note that the concept of authentication is

designed to permit the debtor to 'sign' the agreement

Electronically as well, using email, for example.

The final step is step 7: perfect the security interest by

Filing a financing statement. After the security agreement is

Authenticated, it binds the debtor and the secured party. To

Make it fully effective against subsequent creditors, the

Secured party must perfect the security interest, typically by

Giving constructive notice to third parties.

Listening 2

Tina: So, guys, how was it? Was it worth it?

Jack: Oh, definitely. Old Kellogg knows what he's talking about.

What did you think, Peter?

Peter: Yeah, and he's funny, too. Kept it from being too dry. He

Had some good stories to tell about cases he worked on.

Jack: On the whole, I'd have to say I learned a lot at the

seminar. I'm glad I went. I thought that the IP stuff was the

most interesting. That's where things are going, if you ask

me. That's the future.

Tina: Can you fill me in on what he said?

Jack: Sure. What he did was to give us the big picture, telling

Us about what the situation is in different countries. And

Then he talked about how specific types of IP collateral are

Perfected here in the US under the revised UCC.

Peter: He started off by talking about the importance of

Intellectual property as an asset. He said that for many

Companies, their intellectual property is their greatest

Asset. It makes sense, if you think about it, since IP

Includes everything from patents to software copyrights to

Date: 2015-12-11; view: 689