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Business & Corporate Publications REVISED ARTICLE 9 OF THE UCC Practitioners who document secured transactions are urged to familiarize themselves with Revised Article 9 of the Connecticut Uniform Commercial Code immediately. Connecticut's October 1, 2001 effective date differs from virtually each of the other forty-nine states' July 1, 2001 effective date. The delayed effective date will make multi-state secured transactions difficult to administer during the window period in which some states have adopted the revisions and some have not. For example, under the new law, security interests against assets of "registered entities" (corporations, LLCs and limited partnerships) will be perfected by filing only in the state of incorporation. While the revisions remain ineffective in Connecticut, the forms of security agreement and the places of filing will be unduly duplicative, convoluted and expensive. This summer, for example, as our firm is engaged to render Connecticut "perfection" opinions on multi-state transactions, we are navigating through tricky land mines pertaining to which state's UCC applies, the means of perfecting the security interests after determining which state's law is applicable and the decision as to where the UCC-1 filing is appropriately made. Often, this multi-layered analysis leads the transaction parties to file UCC-1s everywhere that may be legally required, just to be safe. Once Connecticut's Revised Article 9 is effective, this type of bootstrapping will become increasingly unnecessary. Definitions and the nature of collateral have changed under the new law in a manner intended to make modern secured transactions proceed more smoothly. Remedial provisions upon default have also been revised which will hopefully provide clarity to the litigators representing secured creditors and debtors. As we learn and use the new law, we may have a better idea of whether the revisions live up to the fanfare that precedes them. Practitioners are forewarned that the learning curve is substantial, so transactional lawyers should study the revisions this summer. |
