Proceeds

Question 1

Proceeds means the following property :

Answer 1

1. Whatever is acquired upon the sale, lease, license, exchange, or other disposition of collateral
2. Whatever is collected on, or distributed on account of collateral
3. Rights arising out of collateral
4. To the extent of the value of collateral, claims arising out of the loss, nonconformity, or interference with the use of, defects or infringement of rights in or damage to the collateral or
5. To the extent of the value of the collateral and to the extent payable to the debtor or the secured party, insurance payable by reason of the loss or nonconformity of defects or infringement of rights in, or damage to the collateral
6. Cash proceeds (sub category of proceeds) = proceeds that are money, checks, deposit accounts or the like

Question 2

Insurance

Answer 2

While Article 9 does not usually apply to security interests taken in an insurance policy as collateral (the common law or other statutes regulate these transactions), insurance payments that qualify as proceeds are regulated by the Code; §9-109(d)(8). For example, if the collateral is a car that is destroyed in a traffic mishap and the car owner receives compensation from an insurance company, the insurance money is proceeds, and any security interest in the car attaches to these monies.

Question 3

Priorities in Proceeds - Proceeds that are commingled with other property are identifiable proceeds when

Answer 3

The proceeds are good and

If they are not goods - to the extent the secured party identifies the proceeds by tracking

Question 4

A S.I in proceeds is perfected if…

Answer 4

the S.I in the original collateral was perfected

Question 5

A perfected S.I. in proceeds becomes unperfected on the 21st day after a S.I. attaches unless:

Answer 5

1. The following conditions are satisfied
   a. Filed a financing statement that covers the original collateral
   b. Proceeds are collateral in which a S.I. may be perfected by filing in the office in which the financing statement has been filed and
   c. Proceeds are not acquired with cash proceeds
2. Proceeds are identifiable cash proceeds or
3. S.I. in the proceeds is perfected when the S.I. attached to the proceeds or within 20 days thereafter

Question 6

If a filed financing statement covers the original collateral, a security interest in proceeds which remains perfected under subsection (d)(1) becomes unperfected at the later of:

Answer 6

(1) when the effectiveness of the filed financing statement lapses under Section 9-515 or is terminated under Section 9-513; or

(2) the 21st day after the security interest attaches to the proceeds