Searching and Filing Under Article 9

1. Searching and Filing Under Article 9 Presented to The Commercial Financial Services Committee Business Law Section American Bar Association By Jennifer Klemp Norman M. Powell, Esquire Harry C. Sigman, Esquire

2. Introduction • Tips On Filing and Searching • We’re Still In The Transition Phase • Electronic Filing Update • Getting The Debtor’s Name Right • Conclusions and Practice Tips

3. Tips On Filing And Searching • Filling Out The Form • Comply with non-uniform, local requirements • Law • Administrative rules • Initial Filings • Put debtor’s name in the correct box • 1a for organizations • 1b for individuals • Put nothing other than or in addition to the debtor’s name in the box

4. Tips On Filing And Searching • Filling Out The Form • Amendments • Must identify, by file number, the initial financing statement to which the amendment relates • Distinguish correction statements • Can be filed only by debtor • Have no legal effect

5. Tips On Filing And Searching • In Lieu Continuations • An in lieu is an initial financing statement filed in specified circumstances and meeting specified requirements • Circumstances • To be filed in proper office under Article 9 • Relates to pre-effective date filing in another jurisdiction or office

6. Tips On Filing And Searching • In Lieu Continuations • Requirements • Satisfies Part 5 requirements for an initial financing statement • Identifies the pre-effective date financing statement by • Office where filed • Filing date and file number of initial filing and last continuation • Indicate it remains effective • Get and keep a copy

7. Tips On Filing And Searching • Did You Actually File? • Communication to a filing office of a record meeting all the requirements of 516(b) • A wrongfully rejected record is effective as a filed record except as against a purchaser of the collateral who gives value • If a filing office refuses to accept a record, it shall communicate to the person that presented the record the fact of, reason for, date and time of refusal

8. Tips On Filing And Searching • What Appears In The Record? • A filer requesting an acknowledgment of a written record – • May receive an image of the record showing its file number and filing date and time • May furnish the filing office an extra copy on which to note file number and filing date and time • Only the first alternative permits verification that information in the written record was entered correctly

9. Tips On Filing And Searching • What Appears In The Record? • For a record other than a written record – the filing office shall communicate to the filer • The information in the record • The file number • The date and time of the filing

10. Tips On Filing And Searching • What Exactly Did You File? • Definition – you filed what was communicated to the filing office • Unless rightfully rejected, that is now the filed record • Did you file the UCC1 or UCC3 with multi-page collateral description that you proofread?

11. Tips On Filing And Searching • What Exactly Did You File? • Was that simply a source document from which your filing agent retyped to make an electronic filing? • Can filing agent provide copy of actual text that was submitted? • What is your perfection opinion based on? • What does your perfection opinion say it’s based on?

12. Tips On Filing And Searching • Searching • Where to search • Locations of debtor and tangible collateral • What to search • Debtor’s current and former names, and variations • What the search results tell you

13. Tips On Filing And Searching • Article 9 Isn’t Everything • An Article 9 Section 523 search report may disclose any federal tax liens • Debtor’s location for federal tax purposes may differ from its location for Article 9 purposes • Federal tax liens • Naming standards

14. We’re Still In The Transition Phase • Continued Effectiveness of Pre-effective-date Filings – Until The Earlier Of: • Their natural lapse • June 30, 2006 • Comprehensive search – current and former locations • Continued effectiveness of financing statements filed under former Article 9

15. We’re Still In The Transition Phase • Continuation of Pre-effective-date Financing Statements: • Financing statements filed before the effective date of Article 9 • If jurisdiction or filing office has changed, file an initial financing statement in lieu of a continuation

16. We’re Still In The Transition Phase • Amendment and Termination of Pre-effective-date Financing Statements • Financing statements filed in the jurisdiction and office required by Article 9 • File in same office • Financing statements not filed in the jurisdiction and office required by Article 9 • File in lieu • Either with amended information, or “as is” then amend

17. We’re Still In The Transition Phase • Amendment and Termination of Pre-effective-date Financing Statements • Alternative for termination of pre-effective-date financing statements • You can terminate by filing in the “old” office • But only if it hasn’t been “in lieued” • And only if the office still accepts filings

18. We’re Still In The Transition Phase • Words With Two Meanings • Terms in former Article 9 security agreement collateral description • Terms in former Article 9 financing statement collateral descriptions • Continuation Statements or In-Lieu Initial Financing Statements • Deemed authorization to amend

19. Electronic Filing Update • Summary of Delaware’s Electronic Filing Options • Direct online filing • Indirect XML entry via agent’s website • Manual filing • Some Pros and Cons • Manual filing – the document you reviewed is filed • Online and XML – source document for data entry • What’s Coming Next? • Filer keys in “face” data • Attachments via pdf

20. Getting The Debtor’s Name Right • Sufficiency of Debtor’s Name • Seriously Misleading – Search Logic Test • What Is An Individual’s Legal Name

21. Getting The Debtor’s Name Right • A Different Approach – What Names Might Be Effective? • Under former Article 9, searchers were held to a standard of “reasonable diligence” • Under Article 9, tolerance for deviation is reduced • Model Administrative Rules (“MARS”)

22. Getting The Debtor’s Name Right • How Does MARS Search Logic Work? • MARS ignores punctuation, accents, capitalizations, spaces and other “noise words” • MARS ignores words or abbreviations indicating the nature of an organization • MARS does not ignore common variations and abbreviations, typographical errors or misspellings

23. Conclusions and Practice Tips • Filing • Know and follow non-uniform requirements of local law or filing office administrative rules • Get Debtor’s name right • Get the file number right • An in lieu continuation is an initial filing • Get and keep copies of old filings being “in lieued” to prove effectiveness • Whatever was properly communicated to the filing office is what’s filed

24. Conclusions and Practice Tips • Searching • Places to search • Names to search

25. Conclusions and Practice Tips • Legal Opinions • What is the opinion based on • What does the opinion say it is based on • Opining as to priority of filings • Opining as to in lieu continuations

26. Questions and Answers