Deposit and Security Account Control Agreements Under the UCC
Negotiating and Drafting Agreements to Perfect Security Interests
Recording of a 90-minute CLE teleconference with Q&A
Conducted on Wednesday, September 9, 2009
Recorded event now available
This seminar will analyze the methods and requirements for perfecting security interests in bank deposits, security accounts and other investment property for legal counsel. The panel will offer best practices for drafting and negotiating control agreements and offer perspectives on the ABA model control agreement.
Description
A security interest in a bank deposit account is perfected by obtaining "control" as defined in the UCC. The creditor enters into a "control agreement" with the bank and debtor allowing the bank to follow the creditor’s instructions regarding disposition of the funds without the debtor’s consent.
The ABA developed the Model Deposit Account Control Agreement (DACA) to address competing concerns of all parties and minimize protracted negotiations. The expectation is that the ABA model agreement will become the commercially accepted deposit control agreement.
However, there are some pitfalls in the model deposit account control agreement that secured creditors need to consider and steps they should take to reduce their exposure under this agreement.
Listen as our authoritative panel of business transaction attorneys offers best practices for negotiating deposit and securities control agreements and using DACA to best protect clients' interests.
Outline
- Perfecting security interests in deposit accounts
- Necessity of control
- Key provisions of control agreement
- Secured creditor’s concerns
- Depositary bank’s concerns
- Debtor’s concerns
- ABA Model Deposit Account Control Agreement (DACA)
- Analysis of DACA
- Critique of DACA
- Best practices for secured creditors
- Best practices for depositary banks
- Best practices for debtors
- Perfecting security interests in securities accounts and other investment property
- Methods of perfection: filing v. control
- Key provisions of control agreement
Benefits
The panel will review these and other key questions:
- How does a secured creditor obtain control over a debtor's deposit account—and why is control critical?
- What are the pitfalls for secured creditors under DACA and what steps can creditors take to minimize these risks?
- What circumstances make perfection by control preferable to perfection by filing for security interests in securities accounts?
Faculty
Jessica L. DeBruin,
Principal
Goldberg Kohn, Chicago
She represents banks and other commercial lenders in documenting, negotiating and performing due diligence for asset based and cash flow loans. Additionally, Ms. DeBruin has worked on a wide range of credit facilities, private placement note offerings, securitizations, and leveraged leases on behalf of borrowers, issuers, lenders, equity investors, lessees and lessors.
R. Marshall Grodner,
Member
McGlinchey Stafford, Baton Rouge, La.
His practice focuses primarily in commercial transactions, secured transactions, commercial finance, opinion letters, and commercial real estate. He is Co-Chair of the Joint Task Force for Deposit Account Control Agreements of the Business Law Section of the ABA. He is immediate past chairman of the Loan Documentation Subcommittee of the Commercial Financial Services Committee of the ABA.
Robert Rosenberg,
Sr. Vice President, Associate General Counsel
HSBC Bank USA, New York
He is responsible for supporting the Middle Market Lending operations for HSBC Bank USA, N.A. in the metropolitan New York area. He was actively involved in drafting the ABA model Deposit Account Control Agreement and has implemented the use of the ABA DACA by HSBC.
Ordering
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