I've been giving a lot of thought since the last newsletter to what the ComFin Committee offers for its members and (more importantly) what those members want. A survey that the Business Law Section recently conducted indicates that many members don't attend in-person meetings and are looking for information and networking through other means. So while there is much going on at upcoming meetings, from information on legal and market developments to networking opportunities, we've also been sending out more information via emails, listserves, newsletters, blogs and websites and will continue to do so. We've also highlighted in this issue a listserve used by many commercial finance lawyers to discuss issues and some web-based resources in the area of commercial law. If there are other ways we can provide information sharing, networking or other resources to ComFin Committee members, please let me know.

We've again made this issue of the newsletter "open access" so that you can forward it to colleagues who would be interested in the Committee. I'd like to enlist your help in publicizing ComFin's many activities, whether by forwarding the newsletter or emails on upcoming events of interest or bringing a colleague to a meeting or to attend the Committee dinner in Dallas on April 10th.

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The UCC Committee is continually striving to provide its members on a timely basis with important information about developments in commercial law and commercial practice. Anyone with a suggestion for a project the Committee should undertake or with an idea about how the Committee can better fulfill its mission should contact me.

Noteworthy Events at Spring Meeting

The UCC Committee is presenting two wonderful programs at the Spring meeting in Dallas:

Secured Transactions South of the Border (co-sponsored by the Commercial Finance Committee), Friday, April 11, 2008, 2:30pm–4:30pm

Successor Liability in § 363 Bankruptcy Sales and UCC Foreclosures (co-sponsored by the Commercial Finance and Business Bankruptcy Committees), Saturday, April 12, 2008, 1:00pm–3:00pm

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If you'll be attending your first ABA meeting in Dallas, please join us for the UCC and ComFin dinner on Thursday, April 10. Details on the dinner are available here. Attending the UCC Committee or ComFin Committee meetings, forums and programs is a good way to meet people and get an overview of what the committees are doing:

• ComFin Committee Meeting will be held Thursday, April 10, at 10:00 a.m. – 10:30 a.m.
• ComFin Committee Forum "Syndicated Loan Market Update" will be held Thursday, April 10, at 10:30 a.m. – 12:30 p.m.
• UCC Committee Program "Made in Heaven or Oil and Water: ADR in Commercial Finance Disputes" will be held Thursday, April 10, at 2:30 p.m. – 4:30 p.m.
• ComFin Committee Program "Earth Wind and Soybeans: The State of Alternative Energy Finance" will be held Friday, April 11, at 10:30 a.m. – 12:30 p.m.
• UCC Committee Meeting will be held Friday, April 11, at 2:00 p.m. – 2:30 p.m.
• UCC Committee Forum "Secured Transactions South of the Border," co-sponsored by the ComFin Committee, will be held Friday, April 11, at 2:30 p.m. – 4:30 p.m.
• ComFin Committee Program "Commercial Law Developments" will be held Saturday, April 12, at 10:30 a.m. – 12:30 p.m.
• UCC Committee Program "Successor Liability in § 363 Bankruptcy Sales and UCC Foreclosures" will be held Saturday, April 12, at 1:00 p.m. – 3:00 p.m.

And, we'll be hosting a conference call in advance of the meeting to discuss how to navigate the multi-page meeting schedule to get the most out of the meeting – email Susan M. Tyler (styler@mcglinchey.com), Norman M. Powell (npowell@ycst.com,) or Sherman G. Helenese (sherman.helenese@wamu.net), the ComFin Membership Committee Liaisons, or Terri A. Motosue (tmotosue@carlsmith.com), the UCC Membership Committee Liaison, if you would like to be part of that call or have questions about the meeting.

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The Business Law Section of the State Bar of California awarded its Lifetime Achievement Award for 2007 to Steven O. Weise at the September Annual Meeting of the State Bar of California in Anaheim. The award is given each year to a member of the California State Bar who has made significant contributions to the Business Law Section and to business law generally in the State of California over an extended period and who has achieved high status in the legal community. Steve is a nationally recognized expert in all areas of commercial law and his résumé runs almost 40 pages and none of it filler. The Commercial Finance Committee and the UCC Committee warmly add their congratulations to Steve for a very well deserved award.

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Once again we have lost one of the founding members of the Commercial Finance Committee as well as one of the leaders in the field of commercial finance, Earl Glick of Los Angeles. Earl died in early January just short of 78 years old. He was there at the beginning of the CFS committee in 1983 and served as the Program Committee Chair from 1988-1992. He was a regular participant on panels and an active member of the committee for many years.

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We are adding a new feature to the Commercial Law Newsletter. The electronic links provided below are not ABA-affiliated sites, but are resources our members find useful:

1. The UCCLAW-L listserv, which is sponsored by Thomson West, publisher of the "UCC Reporting Service." To subscribe to the UCCLAW-L listserv, go to
   http://lists.washlaw.edu/mailman/listinfo/ucclaw-l;
   
2. U. Penn's archive of NCCUSL final acts and drafts can be accessed at
   http://www.law.upenn.edu/bll/archives/ulc/ulc.htm;
   
3. Pace University's database of CISG decisions can be accessed at
   http://cisgw3.law.pace.edu; and
   
4. Gonzaga University's new Commercial Law Center has a variety of links to useful sites and can be accessed at
   http://www.law.gonzaga.edu/About-Gonzaga- Law/Commercial-Law-Center/default.asp.

If you have other electronic resources you would like to see included in future editions of the Commercial Law Newsletter, please submit them to either Christine Gould Hamm, the Commercial Finance Editor, or Maria Ann Milano, the Uniform Commercial Code Editor.

The purpose of this column is to identify some of the most disconcerting judicial decisions interpreting the Uniform Commercial Code or related commercial laws. The purpose of the column is not to be mean. It is not to get judges recalled, law clerks fired, or litigators disciplined for incompetence. Instead, it is to shine a spotlight on analytical errors, and thereby provide practitioners and judges with reason to disregard the opinion.

First National Bank of Picayune v. Pearl River Fabricators, Inc., 2007 WL 3407401 (La. 2007)
This case presents a priority dispute between a creditor with a security interest in equipment and a buyer located in a jurisdiction different from the original debtor. Unfortunately, what should have been a fairly straightforward application of § 9-316(a)(3), and § 9-317(b) became muddled with analysis of irrelevant issues and inapplicable law. Nevertheless, the court's ultimate conclusion in favor of the buyer was correct.


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The business of corporate loan syndications, trading, and investing has changed dramatically over the past 15 to 20 years. Up until then, banks made loans to their corporate borrowers and typically held those loans on their books. It was never contemplated that loans would be traded and managed by investors like stocks and bonds in a portfolio. Eventually, however, investors were drawn to the attractive features of loans - unlike bonds, loans were senior secured debt obligations with a floating rate of return - and, over the years, a full institutional asset class emerged. Today, such loans are not just held by banks but typically sold to other banks, institutional investors, mutual funds, insurance companies, structured vehicles, pension funds, and hedge funds. Consequently, the past 15 years has witnessed an explosion in the volume of loans being issued in the primary market and traded in the secondary market.

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Law firms and title companies throughout the country conduct and facilitate complex, multi-state real estate closings. They often do so from main offices, national accounts offices, or other central locations. But they may face charges of unauthorized practice of law, and their in-house counsel may be charged with violating ethics rules, if any of the real estate is located in certain jurisdictions.

Some jurisdictions regulate certain aspects of the real estate transaction as the practice of law, and prosecute non-lawyers for violations.

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Commentators have reported that with trillions of dollars of financing activity in the United States each year, commercial finance disputes make up a disproportionately small proportion of the cases decided using alternative dispute resolution ("ADR") techniques. Hostility to use of these techniques is legend – an informal poll taken of the members of the equipment lender's association in 2006 found an overwhelming proportion of their members rejected ADR out-of-hand. Share a cocktail with a business finance lawyer and mention ADR and you will be regaled with stories of arbitration proceedings run amok or fear of 'split the baby' decisions by arbitrators that wouldn't recognize a security interest if it introduced itself.

Under this situation, why should lenders, borrower and their counsel care about ADR? Simply because ADR is immensely powerful and has the potential to simplify, streamline and substantially reduce the cost of resolving commercial finance disputes.

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Alternative energy is one of the hottest topics in the news, and the Commercial Finance Committee is right in the middle of this important issue, as the sponsor of a major CLE program at the Spring Meeting in Dallas this year. On Friday, April 11, 2008, 10:30 a.m. – 12:30 p.m., we are co-sponsoring a CLE program called "Earth, Wind and Soybeans: The State of Alternative Energy Finance." This program will look at the current state of the finance market for alternative/renewable power, how and why things have changed over the last year and where the market is going in the months and year ahead.

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On Friday, April 11, 2008, the Investment Securities Subcommittee of the Uniform Commercial Code Committee will host three presentations. Norm Powell, a partner with Young Conaway Stargatt & Taylor, LLP in Wilmington, Delaware, will present Delaware's Clearer Path to Perfection. Sandra M. Rocks, counsel at Cleary Gottlieb Steen & Hamilton in New York, New York, will present Life Insurance Under the UCC and Perry Hicks, an Associate with Cadwalader, Wickersham & Taft in Charlotte, North Carolina, will present Concerns Arising from Issuers' Restrictions on Transfer on Securities in the Indirect Holding System.

Delaware's Clearer Path to Perfection will discuss Delaware's 2007 legislation enacted to provide additional methods of perfection of security interests and to limit the impact on perfection of conditions placed on the secured party's ability to direct disposition of the collateral. Life Insurance Under the UCC will discuss the treatment of life insurance policies under the Uniform Commercial Code, with particular focus on their inclusion as investment property through "financial asset" treatment. Concerns Arising from Issuers' Restrictions on Transfer on Securities in the Indirect Holding System will address the broad transfer restrictions on securities that underlie security entitlements. These transfer restrictions present attachment and perfection issues in transactions secured by pledges of security entitlements. Equity interests in hedge funds are often subject to these broad transfer restrictions and therefore, pledges of hedge fund equity pose unique challenges for the lenders, borrowers and counsel. This presentation will also provide potential solutions to the more common questions posed by counsel involved in such transactions while highlighting the dire consequences of failing to address these issues. 

The General Provisions and Relations to Other Law Subcommittee will be meeting in Dallas at the Business Law Section's Spring Meeting, on Friday, April 11 from 11:00 am until noon in the Ming Room in the Tower of the Hilton Anatole, Mezzanine Level. The topic will be "Are We Giving Good Faith a Bad Name?" There will be a panel discussion on the 2001 revision to Article One's definition of good faith, which extended the "commercial reasonableness" standard to nonmerchants and has been nonuniformly enacted by a number of jurisdictions. The discussion will be primarily geared toward addressing the following issues: (1) The purpose behind the change; (2) why some legislatures have balked at the change; and (3) what the language should or should not mean.

The Letter of Credit Subcommittee is scheduled to meet from 12:30 p.m. to 2:00 p.m. on Friday, April 11 in Dallas at the ABA Spring Meeting of the Business Law Section. The tentative agenda will include the following items:

• Governmentally Mandated Forms of Letters of Credit;
• Recent case developments;
• Revisions to the Official Commentary to ISP98;
• Drafting of LCCTerms (Letter of Credit Contract Terms) that can be used in connection with letter of credit payment clauses or assurance clauses in contracts. This is intended to be a set of industry terms analogous to those contained in INCOTERMS with regard to shipping times. The project is being spearheaded by the Institute of International Banking Law & Practice; and
• Potential model Reimbursement Agreement.

The Subcommittee on Payments will participate in a presentation titled "Deposited Check Truncation – Check or Electronic Payment?" at the upcoming Spring meeting of the American Bar Association in Dallas. The presentation will take place on Friday, April 11th at 9:00 a.m. The distinguished panelists will discuss the proposed NACHA check truncation pilot program and whether it is a model for payment law convergence or simply a cheaper means of collecting low dollar value checks.

Please join our Subcommittee at the upcoming Spring meeting of the American Bar Association in Dallas, for the following presentation-- "Electronic Sales Contracts: Even the Simple Can Be Complex." This program will explore developments in electronic contracting law and practice, emphasizing the legal, practical and policy issues in contracting electronically to sell goods. The presentation will take place on Thursday, April 10th at 10:00 a.m.

Our Task Force has been diligently working to prepare a first draft of all documents to be included in the 2nd Edition of Forms Under Article 9. The forms should be posted on the ABA site by the end of February. Please review these documents and share your comments at the Spring meeting in Dallas. If you have additional documents you wish to be included in the book please bring these documents to the Spring meeting in Dallas.

The Task Force is nearing completion of the second edition Compendium of State Certificate of Title Laws, to be published by the ABA Section of Business Law. The Compendium will describe each state's certificate of title law, how it works, and its relation to UCC Article 9 and the Uniform Certificate of Title Act (UCOTA).

The Task Force is also working with NCCUSL as it considers expansion of UCOTA to cover watercraft and manufactured housing.

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The Secured Lending Subcommittee of the Commercial Finance Committee and the Secured Transactions Subcommittee of the UCC Committee will hold a joint meeting at the Spring Meeting in Dallas on Saturday, April 12, 2008 from 8:30 a.m. to 10:00 a.m. We look forward to an interesting and timely discussion of "The ABC's of Assignments for the Benefit of Creditors," to be presented by our panel of experts: James C. Chadwick (moderator) and Brent R. McIlwain of Patton Boggs LLP, Michael W. Hilliard (moderator) and Jennifer D. Knapek of Winstead PC and Ronald Winters of Alvarez & Marsal.

As news of an economic downturn becomes more prevalent, we are all seeking to improve our skill sets. Here is an opportunity to add to your repertoire the long-established common law procedure known as assignment for the benefit of creditors. This kind of procedure is often significantly less costly and more flexible than a bankruptcy proceeding, and may allow creditors to achieve a greater recovery more quickly than in bankruptcy. After providing a broad overview of this state procedure, our panel will compare the ABC procedure with the bankruptcy process, focusing on common issues raised by both approaches. The presentation will place an emphasis on practical considerations for a secured creditor's effective utilization of this tool.

We will also be looking for suggestions as to future Subcommittee projects and programs. Please join us in Dallas!

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The Commercial Finance Terms Taskforce has embarked on a plan to compile and publish a "dictionary" of terms used in commercial finance transactions. We are still soliciting additional finance terms for inclusion. Our first meeting is scheduled for Dallas at 10:00 a.m. on April 12, 2008. Please join us and bring any resource materials that include definitions of financing terms! We look forward to creating the last word in financial jargon.

After the Joint Task Force on Deposit Account Control Agreements unveiled its new form of deposit account control agreement at the Section's 2006 Spring meeting in Tampa, Florida, and the initial report of the task force was published in 61 The Business Lawyer 745 (2006), the task force began to develop a series of inserts designed to accommodate transactions other than the paradigm transaction originally contemplated by the deposit account control agreement (the "DACA") developed by the task force. These transactions include those involving a standing disposition instruction, lock box arrangements, a security interest in a time deposit or other deposit account not payable on demand, the blocking of the debtor's access to the deposit account without a standing disposition instruction, a deposit account from which funds are automatically swept into an omnibus investment account, and first and second lien arrangements over the same deposit account.

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The Task Force on Filing Office Operations and Search Logic has been formed to address issues relating to filing and searching under Article 9 of the Uniform Commercial Code. The Task Force will cooperate closely with the International Association of Commercial Administrators ("IACA") to (1) collect and disseminate information on how filing systems operate, with particular attention to differences among individual filing offices; (2) work with IACA and individual filing offices to develop, modify, and implement rules that will help filing offices perform their duties and serve their constituencies; (3) communicate IACA's advice on how best to use the services of filing offices; and (4) make recommendations on whether and how the UCC should be amended to make filing and searching easier, uniform, and more certain to yield the best results. In addition to the development of a cooperative and joint approach between the ABA through the Task Force and IACA, the Task Force will also work with the Internal Revenue Service and the appropriate Committees of the Congress with regard to the pending legislation to establish a central filing system for federal tax liens.

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• Committee on Commercial Finance
      (as of 02/2008)
  
  
• Committee on Uniform Commercial Code
      (as of 02/2008)
  
  

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