Deposit and Security Account Control Agreements Under the UCC

Perfecting Security Interests in Special Collateral Types

Recording of a 90-minute premium CLE webinar with Q&A

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Conducted on Thursday, December 20, 2012

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This CLE course will provide banking counsel with an analysis of the requirements and methods for creating and perfecting security interests in bank accounts, securities accounts and other investment property. The panel will offer best practices for drafting and negotiating control agreements and avoiding common pitfalls.

Description

UCC Article 9 provides lenders with the ability to use their debtor’s bank accounts, securities accounts and other investment property as collateral. There are specific considerations to create and perfect a security interest in these types of collateral.

To create its security interest, the lender should include in its security agreement a sufficient description of the deposit accounts, securities accounts and other investment property collateral.

To perfect its security interest in the debtor’s securities and bank accounts, as well as obtain priority and other protections for its security interest, the secured party usually will want to — and in some cases will need to — obtain “control” over these types of collateral.

A frequently used method of obtaining control of collateral is to enter into a control agreement covering that collateral. There are potential pitfalls in control agreements that secured parties must consider and steps to perfect and protect their interest in the collateral pursuant to the control agreement.

Listen as our authoritative panel of commercial finance attorneys discusses the UCC Article 9 provisions unique to deposit accounts, securities accounts and other investment property as collateral, and discusses best practices for negotiating and drafting deposit and securities account control agreements and avoiding common pitfalls.

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Outline

  1. Deposit accounts, securities accounts and other investment property as collateral
    1. Creation of security interest
    2. Available perfection methods
    3. Priority and “free of claims”
  2. Perfecting security interests in deposit accounts
    1. Importance of control
    2. Key provisions of control agreement
      1. Secured party’s concerns
      2. Depositary bank’s concerns
      3. Debtor’s concerns
  3. Perfecting security interests in securities accounts and other investment property
    1. Methods of perfection: filing v. control
    2. Importance of control
    3. Key provisions of control agreement
      1. Secured party’s concerns
      2. Securities intermediary’s concerns
      3. Debtor’s concerns
  4. Common drafting pitfalls

Benefits

The panel will review these and other key questions:

  • How does a secured creditor obtain control over a debtor's securities account and deposit account — and why is control critical?
  • What circumstances make perfection by control preferable to perfection by filing for security interests in securities accounts?
  • What common drafting pitfalls should be avoided in drafting the control agreement?

Following the speaker presentations, you'll have an opportunity to get answers to your specific questions during the interactive Q&A.

Faculty

R. Marshall Grodner
R. Marshall Grodner
Partner
McGlinchey Stafford

He has an extensive practice representing lenders in large commercial transactions. He is the co-chair of the Joint...  |  Read More

Sandra Stern
Sandra Stern
Partner
Nordquist & Stern

She has been in private practice since 1994, concentrating in commercial finance, including secured transactions and...  |  Read More

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