Revised Article 9, Securitization Transactions and the Bankruptcy Dynamic

Article 9 of the Uniform Commercial Code ( U.C.C. )1 is the law governing the creation, perfection, and enforcement of security interests in personal property. Originally enacted in 1960,2 Article 9 was substantially revised in 1972 in response to changes in commercial financing markets and practices. Since this last revision, there have been further changes, including technological advances, affecting commercial practice and custom. These changes have led the Permanent Editorial Board for the U.C.C. ( PEB ) to recommend to the American Law Institute ( ALI ) and the National Conference of Commissioners on Uniform State Laws ( NCCUSL ) that Article 9, once again, be significantly revised. The stated reason for the current revisions is to ensure that Article 9 keeps pace with changes in commercial financing practices, thereby offering enhanced certainty to the commercial financing markets. Among the changes made to Article 9 are a collection of substantive revisions to the rules affecting a relatively new financing method, known as securitization

Credit Rating Agencies, Structured Securities, and the Way Out of the Abyss

The article examines the role of credit rating agencies (CRAs) in the evolving financial markets, and particularly in connection with the structured finance markets. The movement away from relationship-based lending based on trust, to the less personal capital markets, makes an objective assessment of creditworthiness essential to the structure of legitimate transactions, as well as to the credibility of investor decision-making. Yet, the financial crisis of 2008-2009 revealed that the CRAs seriously underestimated the risk of many complex securities that they rated. As CRAs have devoted a greater share of their resources to develop methods of rating these progressively more exotic securities, their influence over the market has grown exponentially. As a result, the issue of the accuracy of credit ratings and the accountability of CRAS is increasingly critical. The article reviews the voluntary reforms adopted by the largest CRAs, and calls for a more robust regulatory infrastructure and dramatic modification of CRA practices

The Apps for Justice Project: Employing Design Thinking to Narrow the Access to Justice Gap

The lack of available resources to make civil justice available to all, coupled with the fact that existing strategies fail to account for the research on cognitive capacity and other deployment challenges faced by the poor, explain in large part why a high percentage of low-income individuals facing legal problems fail to take action to respond to their legal problems. Such a failure to respond in a timely fashion to a nascent legal problem can lead to an escalation of the initial problem and the emergence of new ones. The access-to-justice community has begun to respond to this intensifying crisis in ever-more creative and innovative ways. Recent years have seen an expanding array of technology and non-technology-based tools designed with the purpose of helping people who cannot afford market-rate lawyers. Such innovations have recently led to adjustments in funding for legal aid programs and in advancements in self-help and assisted-self-help tools. These advancements include on-line client intake systems, self-help triage programs, legal diagnostic tools, robot lawyer chat systems, and legal expert system applications. These tools have the potential to be scaled to serve millions more people and make possible a system that provides effective legal help to everyone who needs it, when they need it, and in a form they can use. The Apps for Justice Project has focused on the development of one such solution to the access-to-justice crisis. Launched in 2016 and funded with a grant from the Maine Economic Improvement Fund, Apps for Justice has developed practical, technology-based tools (applications, or apps) that enable low- and moderate-income residents to address their legal and law-related problems. The apps, written at a fourth grade reading level to best serve the widest audience, use plain language rather than legal jargon. Additionally, drawing on the literature from distance education, public health, behavioral economics, experimental psychology, cognitive psychology, and sociology, each app includes links to positive self-affirmation exercises and employs psychologically affirming language. This article describes both the evolution and development process of this project

The Consumer Bankruptcy Fee Study: Final Report

The Consumer Fee Study’s primary objective is to identify and monetize these costs of bankruptcy access through the analysis of quantitative and qualitative data gathered from court dockets and from professionals working within the bankruptcy system. We began the quantitative section with the hypothesis that following BAPCPA’s enactment, the cost of accessing the consumer bankruptcy system increased. We set out to determine the degree of increased costs, as well as to identify the specific policies and practices affecting these costs. Additionally, we endeavored to evaluate, with specificity, how diverse local procedures and guidelines impact the system’s processes and outcomes. Our focus throughout the Study was on the consumer bankruptcy system and its principal stakeholders. Until now, empirical study of BAPCPA’s impact has focused primarily on the system’s demand side, gathering and analyzing financial and sociological data with respect to debtor households. The effect of BAPCPA on debtors, however, cannot be fully assessed without an examination of the architecture that surrounds a consumer’s decision to file, coupled with an account of the complexity of factors that inform and influence the consumer’s experience in the bankruptcy system. This Study addresses issues related to the institutional framework of consumer bankruptcy by not only measuring and monetizing the cost of access, but by also examining the incentives and constraints imposed by the system

The Consumer Bankruptcy Fee Study: Final Report

The Consumer Fee Study’s primary objective is to identify and monetize these costs of bankruptcy access through the analysis of quantitative and qualitative data gathered from court dockets and from professionals working within the bankruptcy system. We began the quantitative section with the hypothesis that following BAPCPA’s enactment, the cost of accessing the consumer bankruptcy system increased. We set out to determine the degree of increased costs, as well as to identify the specific policies and practices affecting these costs. Additionally, we endeavored to evaluate, with specificity, how diverse local procedures and guidelines impact the system’s processes and outcomes. Our focus throughout the Study was on the consumer bankruptcy system and its principal stakeholders. Until now, empirical study of BAPCPA’s impact has focused primarily on the system’s demand side, gathering and analyzing financial and sociological data with respect to debtor households. The effect of BAPCPA on debtors, however, cannot be fully assessed without an examination of the architecture that surrounds a consumer’s decision to file, coupled with an account of the complexity of factors that inform and influence the consumer’s experience in the bankruptcy system. This Study addresses issues related to the institutional framework of consumer bankruptcy by not only measuring and monetizing the cost of access, but by also examining the incentives and constraints imposed by the system

Professional Responsibility Redesigned: Sparking a Dialogue Between Students and the Bar

In recent years, there have been many public and private, formal and informal complaints about the behavior of lawyers. Moreover, lawyers\u27 tenuous reputation for honesty and integrity has been tarnished by recent, well-publicized scandals. The public, as well as members of the bench and bar, have further decried a decline in attorney professionalism. More than once, it has been suggested that in some way, failings of law schools are to blame. In response to these observations about the professional behavior of lawyers and as a result of the author\u27s experiences of teaching a traditional, Socratic-method Professional Responsibility class for many years, the author decided to focus concentrated efforts on redesigning the Professional Responsibility course

Revised Article 9, Securitization Transactions and the Bankruptcy Dynamic

Article 9 of the Uniform Commercial Code ( U.C.C. )1 is the law governing the creation, perfection, and enforcement of security interests in personal property. Originally enacted in 1960,2 Article 9 was substantially revised in 1972 in response to changes in commercial financing markets and practices. Since this last revision, there have been further changes, including technological advances, affecting commercial practice and custom. These changes have led the Permanent Editorial Board for the U.C.C. ( PEB ) to recommend to the American Law Institute ( ALI ) and the National Conference of Commissioners on Uniform State Laws ( NCCUSL ) that Article 9, once again, be significantly revised. The stated reason for the current revisions is to ensure that Article 9 keeps pace with changes in commercial financing practices, thereby offering enhanced certainty to the commercial financing markets. Among the changes made to Article 9 are a collection of substantive revisions to the rules affecting a relatively new financing method, known as securitization

The Technology-Rich Dot-Com in Bankruptcy: The Debtor as Owner of Intellectual Property

The principal assets of many enterprises doing business primarily on the Internet are in the nature of property categorized under the law as intellectual property—namely copyrights, patents, trademarks, and service marks. These technology-rich enterprises, whether in the start-up phase or well established, are often in need of commercial financing. Traditionally, to establish or maintain a marketshare, a firm offers its tangible and intangible assets to a commercial bank or other financier, who takes an interest in them as security for a loan. These financing transactions, when they involve personal property security, are most commonly governed by Article 9 of the Uniform Commercial Code (U.C.C.). When a preponderance of a firm\u27s assets are comprised of intellectual property, however, Article 9 is not necessarily and exclusively the appropriate governing law. Transactions involving intellectual property as security may implicate, in certain circumstances, the statutes defining and governing parties\u27 rights in intellectual property. One of the fundamental problems that has been identified when intellectual property is involved, however, is that the legal regime governing the use of intellectual property as collateral is unclear and confusing. Whereas Article 9, in outlining the rules for perfecting security interests in personal property collateral, as well as defining priority rights held by a secured party, provides clear and certain rights to all parties to commercial transactions within its reach, intellectual property law fails to address the same concepts as Article 9, offers different timing rules and procedures, and eschews Article 9\u27s terminology. Accordingly, a party seeking to use intellectual property as collateral is caught in the intersection of intellectual property law and Article 9—with very little direction as to which way to turn. This uncertainty takes on greater urgency when the debtor, as owner of the intellectual property, files for bankruptcy protection. Bankruptcy provides an acid test for the efficacy of non-bankruptcy law perfection of security interests; the strength and soundness of non-bankruptcy law interests are scrutinized in bankruptcy. When non-bankruptcy law is not state Article 9 but federal intellectual property law, the vulnerabilities in the attachment, perfection and priority rules may be revealed. Moreover, several important bankruptcy issues beyond the issue of the effectiveness of perfection of security interests in intellectual property are raised in “dot-com” bankruptcies. These include (i) the extent to which the company\u27s intangible assets are included in its bankruptcy estate; (ii) the restrictions, if any, on the post-petition use, sale, or lease of intellectual property; (iii) the increased vulnerability of creditors to trustee claims of stay violations; and (iv) the potentially greater risk of avoidance of pre-petition transfers as preferential. This Article will explore these issues in the context of a hypothetical “dot-com” enterprise