What are identifiable cash proceeds?

Upon the disposition or collection of collateral, a secured party’s security interest continues in any “identifiable” proceeds. If the proceeds are cash, common law principles of tracing proceeds, including the “equitable principle” of the “lowest intermediate balance rule,” are used to identify the cash proceeds.

What are proceeds under the UCC?

What are Proceeds? “Proceeds” is defined as whatever is acquired on the sale, lease, or other disposition of property, whatever is collected on or distributed on account of collateral, rights arising out of collateral, and certain claims arising out of the collateral.

What does Article 9 of the UCC cover?

Article 9 is a section under the UCC governing secured transactions including the creation and enforcement of debts. Article 9 spells out the procedure for settling debts, including various types of collateralized loans and bonds.

Are cash proceeds automatically perfected?

Like current law, if the security interest in the original collateral was perfected, then the proceeds security interest is automatically perfected for a short period of time, giving the creditor an opportunity to take the steps necessary in order to maintain perfection.

How are commingled cash proceeds identifiable in UCC § 9-315?

Commingled cash proceeds are identifiable within the meaning of UCC § 9-315 (a) (2) as long as the balance in the bank account into which the cash proceeds are deposited does not drop below the amount of the cash proceeds initially deposited.

Which is purchase money security interest under UCC?

If you sell goods on credit, lending your customer the money to purchase, you are a “purchase money lender.” If you retain a security interest in the goods you sell in order to secure payment from the debtor, this is a “purchase money security interest.” Purchase money security interests receive a special priority under the UCC.

How does security interest in proceeds of collateral work?

Upon the disposition or collection of collateral, a secured party’s security interest continues in any “identifiable” proceeds. If the proceeds are cash, common law principles of tracing proceeds, including the “equitable principle” of the “lowest intermediate balance rule,” are used to identify the cash proceeds.

When does a perfected security interest in proceeds become unperfected?

A security interest in proceeds is a perfected security interest if the security interest in the original collateral was perfected. (d) [Continuation of perfection.] A perfected security interest in proceeds becomes unperfected on the 21st day after the security interest attaches to the proceeds unless: