Question

Discuss the priorities among the various parties who may have competing interests in collateral and the rights and remedies of the parties to a security agreement after default by the debtor.

Answer 1

Priorities who gets what when a debtor default ?

Depending on how the priorities in the polythene were established even is secured creditor me walk away with the Colateral or with nothing. Because of the general rule and the exceptions.

General rule

The general rule regarding priorities is to use a quotation attributed civil war general the one who wins gets their first test with the most test. First to do the best job of perfecting Wales the uniform commercial code creates a race of deligence among competitors.

Application of the rule.

Rosemary without having get lent money files financial statement of February 1 covering certain Colateral owned by Susan. Under uniform commercial code article 9 efiling may be made before the security interest attaches on March 1 Erika files similar statement also without coat described in the statement she filed on March 1 on May 1 Rosemary also loans Susan Dolo 1000 with the same for court as security who has priority Rosemary does since she filed first even though Erica actually first extended the loan which was perfected when made the result is dedicated by the rule even though Rosemary may have known of Erika 's interest when she is subsequently made her loan.

Susan cajoled both both Rosemary in editor is unknown to other to her alone dollar 1000 secured by The Fur coat. Which she already owns in which hands in her quote closest Erica gifts to send the money a week after Rosemary but Rosemary has not perfect Ed and ID card does not either a week later they find out that they have each made a loan against the same coat. Who has priority whoever perfects first the rule creates race to the filing office or to the susan's closest whoever can submit the financing statement or actually take possession of the coat first will have a Priority. The outcome does not depend on knowledge or lack of knowledge that someone else is claiming a security interest in the same collateral. But what of the rule that is absence of perfection whichever security interest first attached has priority this is thought to be of merrily theoretical interest since it is hard to imagine a situation where the case would come into litigation without either party having perfected his interest and if the debtor filed a petition in bankruptcy neither an perfected security interest would prevail against the bankruptcy trustee