Perfecting Security Interests in Deposit Accounts, Securities Accounts and Other Investment Property

Establishing Control Under the UCC with Special Types of Collateral

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


Conducted on Thursday, April 27, 2017
Recorded event now available


This CLE webinar will provide commercial finance and bankruptcy attorneys with an analysis of the requirements and methods for creating and perfecting security interests in bank accounts, securities accounts, and other investment property to achieve the desired priority. The panel will offer best practices for drafting and negotiating control agreements and avoiding common pitfalls.

Description

UCC Article 9 provides debtors with the ability to use their bank accounts, securities accounts and other investment property as collateral to obtain credit. There are specific considerations to create and perfect a security interest in these types of collateral and for the lender’s security interest to have the desired priority.

For the security interest to be created and to attach, the security agreement should contain a sufficient description of the deposit accounts, securities accounts and other investment property collateral. For the security interest to be perfected and to achieve the desired priority, the secured party usually will want to—and in some cases will need to—obtain “control” over collateral of these types.

A frequently used method of obtaining control of collateral is for the lender, the borrower, and the depositary bank or securities intermediary to enter into a control agreement covering that collateral. Secured parties need to consider the potential pitfalls in control agreements and steps to protect their interests in the collateral in 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.

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. Depository bank’s concerns
      3. Debtor’s concerns
  3. Perfecting security interests in securities accounts and other investment property
    1. Methods of perfection: filing vs. 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 issues:

  • 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 and when is control necessary for perfection of a security in interest in a deposit account?
  • What common drafting pitfalls should be avoided in drafting the control agreement?

Faculty

Sandra M. Rocks, Counsel
Cleary Gottlieb Steen & Hamilton, New York

Ms. Rocks' practice focuses on commercial financing, including secured transaction and bankruptcy law. She is Co-Chair of the Investment Securities Sub-Committee of the ABA Business Law Section UCC Committee. She also serves on the TriBar Committee on Legal Opinions and participated in TriBar's preparation of its original and updated reports on security interest opinions under Article 9 of the UCC.

Edwin E. Smith, Partner
Morgan, Lewis & Bockius, New York and Boston

Mr. Smith concentrates his practice in commercial law, debt financings, structured financings, workouts, bankruptcies, and international transactions. He is particularly knowledgeable on commercial law and insolvency matters, both domestic and cross-border. His representations have included those in major bankruptcies including Lehman and the City of Detroit. Mr. Smith often advises financial institutions on documentation and risk management issues.

Steven O. Weise, Partner
Proskauer Rose, Los Angeles

Mr. Weise practices in all areas of commercial law and has extensive experience in financing, especially in those secured by personal property, including structured financing. He is regarded as one of the foremost authorities on Article 9 of the UCC. He is a member of the Permanent Editorial Board for the UCC and a member of the American Law Institute’s UCC Article 9 Drafting Committee. Mr. Weise is also the past chair of the American Bar Association’s Business Law Section Legal Opinions Committee.


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Customer Reviews

The presenter was very articulate and had an excellent command of the topic and provided very thorough handouts.

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Mercury Marine

The seminar was interesting and laid out the subject matter in a clear and organized manner.

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Zarwin Baum

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Gordon, Fournaris & Mammarella

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Banking & Finance Law Advisory Board

Irving C. Apar

Partner

Thompson Hine

Mark N. Berman

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Northeastern University

Willa Cohen Bruckner

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Alston & Bird

Lawrence Kaplan

Of Counsel

Paul Hastings

Kevin Petrasic

Partner

White & Case

Laura D. Richman

Counsel

Mayer Brown

Robert M. Stern

Partner

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Andrew Stutzman

Partner

Stradley Ronon Stevens & Young

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