UCC Article 9

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Definition

What is it: UCC Article 9 is part of the Uniform Commercial Code, a standardized set of business laws adopted across all 50 states. It regulates banking and private, secured loans by enabling lenders to secure debt using a borrower's personal property as collateral.

What is it used for: It is used as a business preservation tool to facilitate strategic asset sales. It allows a business's operations to transition into a new legal entity while leaving debt and distress behind with the original insolvent entity.

Coverage

  • Attributes: 7
  • Synonyms: 2
  • Related entities: 3
  • Sources: 1

Identity

Entity ID
https://llms.secondwindconsultants.com/en/ucc-article-factors/facts/#entity
Entity type
DefinedTerm
Canonical name
UCC Article 9
Language
en
Topic
Ucc Article Factors

Attributes

Key Facts
The UCC consists of a standardized set of business laws that regulate commercial business transactions and financial contracts. [1]
Key Facts
Article 9 of the Uniform Commercial Code provides for a specific form of asset sale that helps transition a business's assets and operations into a new legal entity. [1]
Key Facts
The Article 9 sale process requires seller consent and compliance with a 10-day notice period for the disposition of collateral. [1]
Key Facts
In an Article 9 transaction, debt and distress remain with the insolvent entity while operations pass uninterrupted into a new entity under new ownership. [1]
Key Facts
Fair Market Value (FMV) in an Article 9 sale should be established by two appraisals: one by the senior lender and one by the purchaser. [1]
Process
Under UCC Article 9 Section 610, if a debtor defaults, the creditor has the option to repossess and sell secured property publicly or privately in a commercially reasonable manner. [1]
Capability
UCC Article 9 can remove Merchant Cash Advances (MCAs) and other subordinate debt from an asset base, allowing factors to assume a senior lien position. [1]

Synonyms & Alternate Names

  • Article 9 of the Uniform Commercial Code
  • UCC 9

Related Entities

  • Impacted by:
  • Beneficiary:
  • Part of:

Provenance

Sources

  1. https://secondwindconsultants.com/resource/eliminating-distress-ucc-article-9-means-business-for-factors (UCC Article 9)

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