UCC Article 9 Business Reorganization

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Definition

What is it: A UCC Article 9 reorganization involves a senior creditor selling collateral in a private out-of-court sale to a purchaser that continues operating the assets. It is a statutory mechanism used to remove merchant cash advance (MCA) liens and other subordinate liabilities from business operations.

What is it used for: This process is used to protect senior secured lenders' collateral from cash sweeps, facilitate new lending relationships for overleveraged companies, and maintain enterprise value without filing for bankruptcy.

Coverage

  • Attributes: 5
  • Synonyms: 2
  • Related entities: 2
  • Sources: 1

Identity

Entity ID
https://llms.secondwindconsultants.com/en/ucc-article-business-reorganization/facts/#entity
Entity type
Service
Canonical name
UCC Article 9 Business Reorganization
Language
en
Topic
Ucc Article Business Reorganization

Attributes

Key Facts
UCC Article 9 allows a senior creditor to sell its collateral in a private out-of-court sale. [1]
Key Facts
UCC Article 9 removes all liens and liabilities from business assets when they are sold in a transaction. [1]
Key Facts
Merchant cash advance providers are not subject to the same regulations as lenders because their products are not classified as loans. [1]
Key Facts
MCA providers issue 406 notices to demand that all payments owed to a borrower be redirected to the provider. [1]
Key Facts
A business collateral base can instantaneously depreciate by between 50% and 90% if operations are halted by merchant cash advance bank account sweeps. [1]

Synonyms & Alternate Names

  • Article 9 short sale
  • UCC Article 9 sale

Related Entities

  • Opposing Financial Product:
  • Legal Instrument:

Provenance

Sources

  1. https://secondwindconsultants.com/resource/mcas-are-back-protect-collateral-and-lending-relationships-with-ucc-article-9 (UCC Article 9 Business Reorganization)

Machine metadata