BRIEFINGS FOR FELLOWS
The College will host short updates from our observers to drafting projects and on other developments of interest to Fellows. Calls/webinars will be at 4 pm ET/1 pm PT (unless otherwise noted) on the specified date. Official Observer Program calls are free of charge to ACCFL fellows.
Future Observer Briefing Calls to be announced.
TIME: 4 p.m. ET/ 1 p.m. PT
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COMPLETED BRIEFINGS AND RELATED MATERIALS
- January 24, 2017, Steve Weise (Proskauer Rose LLP), Sandra Rocks Edwin Smith (Morgan, Lewis & Bochius LLP), and Professor Carl Bjerre (University of Oregon School of Law) were the leaders of this briefing: The Hague Convention on Securities held with an Intermediary, Materials were shared with Fellows and included (1) the Convention, (2) Choice of Law flowchart, (3) an Explanatory Report, and (4) the Draft 2013 PEB Commentary. The Hague Securities Convention will go into effect in the United States on April 1, 2017. The Convention is a choice of law convention that addresses various issues relating to securities held with a bank, broker or clearing corporation in the indirect holding system. The Convention will in many cases preempt the choice of law rules in Articles 8 and 9 of the Uniform Commercial Code for securities held in the indirect holding system on a number of issues including determining the law applicable to the perfection and priority of security interests in the securities. Although the choice of law outcomes under the Convention will in most instances be the same as under Articles 8 and 9, there are some situations in which the outcomes will be different. Our panelists discussed these differences and how to prepare to address them. These issues are especially important to address, because the Convention will apply to pre-effective date transactions.
December 14, 2016, Fellows Neil Cohen (Brooklyn Law School) and Steve Weise (Proskauer Rose LLP), members of WG VI, described the Model Law (The UNCITRAL Model Law on Secured Transactions) and the current work of WG VI on a Guide to Enactment.The United Nations Commission on International Trade Law (UNCITRAL) Working Group VI (Security Interests) finalized its Model Law on Secured Transactions, available here.
The UNCITRAL Model Law on Secured Transactions (the "Model Law") deals with security interests in all types of tangible and intangible movable property, such as goods, receivables, bank accounts, negotiable instruments, negotiable documents, non-intermediated securities and intellectual property with few exceptions, such as intermediated securities. The Model Law follows a unitary approach using one concept for all types of security interest, a functional approach under which the Model Law applies to all types of transaction that fulfil security purposes, such as a secured loan, retention-of-title sale or financial lease, and a comprehensive approach under which the Model Law applies to all types of asset, secured obligation, borrower and lender. In this way, the Model Law is intended to address the main problem of secured transactions laws around the world, that is, the multiplicity of regimes that creates gaps and inconsistencies.
The Model Law includes a set of Model Registry Provisions (the "Model Provisions") that can be implemented in a statute or other type of legal instrument, or in both. The Model Provisions deal with the registration of notices of security interests in a publicly accessible Registry to make a security interest effective against third parties and to provide an objective basis for determining the priority of a security interest over the rights of competing claimants. By providing a transparent, comprehensive and rational legislative framework of secured financing, the Model Law is expected to have a beneficial impact on the availability and the cost of credit, in particular to small and medium-size enterprises in developing countries. This will not only assist in their market inclusion and alleviating poverty, but also contribute to achieving Goal 1 of the 17 Sustainable Development Goals on ending poverty. The Model Law is based on the United Nations Convention on the Assignment of Receivables in International Trade, the UNCITRAL Legislative Guide on Secured Transactions, the Supplement on Security Interests in Intellectual Property and the UNCITRAL Guide on the Implementation of a Security Rights Registry. For the treatment of security interests in insolvency, the Model Law relies on the recommendations of the UNCITRAL Legislative Guide on Secured Transactions and the UNCITRAL Legislative Guide on Insolvency Law.
- December 2, 2016, Pamela J. Martinson (Sidley Austin LLP), ACCFL's Secretary and Observer to the Uniform Law Commission’s Regulation of Virtual Currency Businesses Project, updated us on the most recent activities of the Project, including the late October meeting of the Drafting Committee. In light of the rapid development of the virtual currency marketplace and interest in a common set of standards that would bring more certainty to regulation of participants in that marketplace, the Drafting Committee is tasked with developing a draft uniform act on the regulation of virtual currency businesses. At the October meeting, the Drafting Committee considered whether user protections such as those contained in UCC Article 8 should be integrated into the uniform act, and pointedly welcomed input from all interested persons. Here is a link to the most recent draft of the Act.
- August 23, 2016, Treasurer Norman Powell (Young Conaway Stargatt & Taylor, LLP) provided the fellows with a one-half hour presentation on a recent revision to the Delaware Statutory Trust Act. Norm presented an analysis of the issues and outlined some useful information for fellows to know in advance of the call:
"In the past, every Delaware statutory trust was a “separate legal entity.” Starting in August 2016, “separate legal entity” status is simply the default rule applicable to every Delaware statutory trust “unless otherwise provided in its certificate of trust and in its governing instrument." This flexibility is generally understood to be a response to those in the structured finance community that continue to use common law trusts, rather than Delaware statutory trusts, out of concern that the former may be treated more advantageously by certain regulators and others under applicable provisions of federal and other law. Where assets are held in common law trusts (and now, perhaps, Delaware statutory trusts as to which the default rule has been displaced) those assets are generally held in the name of the trustee. While perhaps solving one challenge, the amendment gives rise to another. This new option of being a non-entity raises several questions with respect to the application of Uniform Commercial Code Article 9 (“Article 9”). It is unclear whether a non-entity Delaware statutory trust is nonetheless a “registered organization” under Article 9, and, more fundamentally, whether it can fit within the definitional parameters of the term “debtor” as used in Article 9 parlance."
- May 2, 2016, Pamela J. Martinson (Sidley Austin LLP), ACCFL's new Secretary, updated us on the Committee's most recent activities. The Uniform Law Commission (“ULC”) Drafting Committee on Regulation of Virtual Currency Businesses (the “Committee”) held recent meetings in February in Palo Alto and April in Chicago. In light of the rapid development of the virtual currency marketplace and interest in a common set of standards that would bring more certainty to regulation of participants in that marketplace, the ULC tasked the Committee with developing a draft uniform law on the regulation of virtual currency businesses.
Given the difficulty of the issues presented and the evolving technology, the meetings to date have focused on resolving significant issues of scope and purpose so that a draft Act can now be produced for a first reading at the ULC Annual Meeting this coming summer. Helpful input has been received from many in industry. Here are links to some of that input: Electronic Frontier Foundation letter to ULC; Coin Center slides on multi-sig and n-lock transactions; Peter VanValkenburg (Coin Center) email on virtual currency exchange; Ripple letter to ULC; March 22, 2016 Committee meeting notes.
HERE IS A LINK to the most recent draft of the Act for you to download.
Pam reported on the direction taken by the Committee and issues of particular import to the commercial finance industry.
March 14, 2016, Fellows Professor Neil B. Cohen (Brooklyn Law School) and Steven O. Weise (Proskauer, Los Angeles) reported on the recent progress of the UNCITRAL Working Group. Meetings of the group are aimed toward final approval of the model law scheduled for this summer. The conference helped to educate the Fellows on this important upcoming development and get feedback from knowledgeable practitioners on clarifications or improvements that might be possible before the text is finalized.
March 18, 2016 Briefing Call was presented by Fellow Larry Safran (Latham & Watkins, LLP). Larry reported on the work of ABA Joint Task Force on Security Interests in Equity Interests of LLCs and Other Unincorporated Entities towards a model Security Agreement for limited liability company interests. The current Draft Security Agreement was provided for download.
February 12, 2016, Professor Stephen L. Sepinuck, ACCFL Fellow and the College's representative on Uniform Commercial Real Estate Receivership Act project, discussed the Act, which received final approval from the ULC in the summer of 2015. The call focused on the key features of the Act and why states should adopt it. A copy of the Act can be found here.
January 12, 2016 ACCFL Fellow and Official Observer Sylvia Chin (White & Case LLP) updated us on developments and issues in legal opinion practice discussed at recent Working Group on Legal Opinions (WGLO) sessions. WGLO provides a national forum for the discussion of important issues relating to closing opinions in commercial transactions. Participants include opinion givers, opinion recipients, the ABA, state and local bars as well as rating agencies and law firm malpractice insurers. The ABA has allowed ACCFL Fellows to access the WGLO newsletter. The Fall 2015 issue is found here. Also provided to follow along during the call was the agenda from the October 2015 WGLO meeting. Click on this link and you can download the document and print it for your convenient use.
- December 8, 2015, ACCFL Fellow and Official Observer Carolan E. Berkley (Stradley Ronon Stevens & Young, LLP) provided an update on the Uniform Law Commission drafting committee project for a Uniform Series of Unincorporated Business Entities Act. The drafting committee met during November 6-8, 2015, to continue its work. Series are quasi-distinct legal constructs existing within an overarching LLC. Protected series feature “internal shields” that protect the assets of one protected series from the creditors of the LLC or of other protected series. Traditional LLC liability shields, by contrast, protect the owners of the LLC from liability for obligations of the LLC. The seriesLLC structure lowers administrative expenses while maintaining separation of business activities. Some form of series LLC structure is currently available in fourteen states and the District of Columbia. The statutes are not uniform, whereas uniformity is a benefit offered by most other unincorporated business entity laws. The Drafting Committee is considering the ability of each series to be a separate legal entity, the nature of public filings necessary to establish the entity and preserve transparency, and the power of the entity to hold title to assets. Here is the link to the November 2015 committee draft.
- November 18, 2015, Fellow Paul Hodnefield (Corporation Service Company) and ACCFL Treasurer Norm Powell (Young Conaway Stargatt & Taylor, LLP) presented an exceptionally well attended conference call about the Delaware Secretary of State’s Office requirement for UCC filings to be submitted electronically starting December 1, 2015. The discussion included the mechanics of various filing options and issues they present for secured parties and attorneys who deliver perfection opinions. Paul has also provided THIS ALERT about the North Dakota UCC electronic filing requirements.
- October 28, 2015, ACCFL fellow and Official Observer Pamela Martinson (Sidley Austin LLP) gave us a report on the first meeting of the ULC Drafting Committee on Regulation of Virtual Currencies. Q&A and discussion followed Pam’s presentation. This was an exciting and unique opportunity for ACCFL fellows to participate in the development of new law in a rapidly growing sector of interest to commercial finance attorneys.
- June 25, 2015,College Observer Carolan E. Berkley provided anupdate on the Uniform Law Commission Drafting Committee Project for a Uniform Series of Unincorporated Business Entities in advance of the ULC Annual Meeting discussion in mid-July. Here is a link to the “Annual Meeting Draft” of the Series of Unincorporated Business Entities Act that was considered at the 2015 ULC Annual Meeting. Also included is an “Issues Memo”.
- Working Group on Legal Opinions (WGLO), Sylvia Fung Chin (June 17, 2015, December 11, 2014 and April 3, 2014)
> June 2015 slides here
> ABA Summer 2015 Newsletter with WGLO summaries here
> December 2014 materials: The ABA Legal Opinions Committee Summer 2014 newsletter containing a summary of the May 2014 WGLO sessions can be accessed here. The ABA Report on Outbound Cross-Border Opinions can be accessed here. Information about the WGLO October 2014 Cross-Border Opinions Panel Report can be accessed here . Additional information about WGLO can be found here on the ABA website.
> April 2014 materials: Click here to download the Winter 2013 newsletter of the ABA BLSLegal Opinions Committee which contains a summary of WGLO’s October 2013 meeting discussed on the call.
- Model Intellectual Property Security Agreement Joint Task Force (MIPSA), Katherine Simpson Allen and Howard Darmstadter (November 18, 2014 and March 27, 2014)
Click here for the November 2014 MIPSA working draft. Click here for the May 2014 report on the project from Howard Darmstadter. Visit the MIPSA Taskforce webpage for additional materials and information on Taskforce activities.
- International Association of Commercial Administrators (IACA) (June 10, 2015) Paul Hodnefield (Corporate Service Company) & Darrell Pierce (Dykema Gossett PLLC). IACA Model Administrative Rules (“MARS”) provide the framework for UCC operations at most state-level filing offices in the U.S. and also serve as a guide for those who search or file UCC records. This year, IACA approved the first significant changes to MARS since 2007. Discussed was the impact the new MARS will have on both filing offices and stakeholders, as well as the potentially serious consequences for those who file or search in states with rules that deviate substantially from MARS.
> Materials from the IACA Briefing
- ABI Commission to Study the Reform of Chapter 11, Elliot Ganz (June 17, 2014)
The ABI Commission to Study the Reform of Chapter 11 plans to propose significant changes to Chapter 11 to reflect the development of the secured credit market since the last major revision of the Bankruptcy Code in 1978. The changes being discussed would be a complete rethinking of Chapter 11 reorganizations and could adversely affect secured creditors’ recovery from their collateral as well as the market for distressed credits. The panel provided an overview of the proposals and possible market impacts. Additional info about the Commission is available on the ABI website. Materials relating to the call can be accessed at the following links:
> Papers from the ABI Illinois Symposium
> Activist Investors, Distressed Companies, and Value Uncertainty
> Secured Finance Externalities
> Slides for June 17 Webinar
- Home Foreclosure Procedures Act, Prof. Amy Boss, Prof. Neil Cohen, Teresa Wilton Harmon and Steve Weise (March 18, 2015, May 27, 2014 and April 15, 2014)
> March 2015 materials: Draft of the proposed model act to be discussed at the February 2015 drafting committee meeting; A proposal for inclusion in the draft of a requirement of a state registry for the filing of mortgage notes; A proposal being developed under the auspices of the FRBNY of a registry system for the filing of mortgage notes
> April 2014 materials: Click here to download part one of the materials
and click here to download part two of the materials.
> May 2014 materials: HFPA Draft Clean and HFPA Draft Redline
> Click here to access roster of drafting committee participants and observers.
> Click here to access the article A Proposal for a National Mortgage Registry: MERS Done Right, 78 Missouri Law Review (2013). In this article, Prof. Dale Whitman analyzes the existing legal regime for the transfers of notes and mortgages on the secondary market, including the MERS system, and proposes an alternate system and model law. The College has been granted permission by the Missouri Law Review to post Prof. Whitman’s article, and we extend our thanks to them.
- Model Commercial Real Estate Receiverships Act (fka Model Act on Appointment and Powers of Real Estate Receivers), Prof. Stephen L. Sepinuck (February 26, 2015 and March 17, 2014)
> the draft model act was discussed on the February 2015 briefing call.
> Steve Sepinuck’s notes from the February 2015 meeting of the drafting committee can be accessed here
> Prof. Sepinuck’s notes from the November 14-15, 2014 meeting of the drafting committee.
> Click here to download Prof. Sepinuck’s notes from the March 2014 drafting committee meeting.
- Series of Unincorporated Business Entities Act, E. Carolan Berkley (March 6, 2014)
> Click here to download materials from the call.
> On February 25, 2015 WGLO provided a webinar on closing opinion issues relating to series entities. Follow this link for additional information.