On February 12, 2020, Morgan Pottinger McGarvey filed a “friend of the Court” brief urging the United States Supreme Court, Case No. 19-870, to review the decision of the United States Court of Appeals for the Seventh Circuit in the case of In re: I80 Equipment , LLC, regarding the requirements for a valid Financing Statement. The brief was filed on behalf of two law professors who are also Uniform Law Commissioners actively involved in the drafting and implementation of Article 9 – Secured Transactions of the Uniform Commercial Code.
The Seventh Circuit’s decision (reported at 938 F.3d 866) held that the lender’s financing statement was sufficient even though it only identified the claimed collateral as being the “Collateral described in First Amended And Restated Security Agreement dated March 9, 2015, between Debtor and Secured Party” and did not attach a copy of that Security Agreement. The Seventh Circuit’s decision has been roundly criticized by commentators, and it is in conflict with a decision of the United States Court of Appeals for the First Circuit in In re Financial Oversight and Management Board for Puerto Rico, 914 F.3d 694 (1st Cir. 2019) and numerous other court decisions. The brief explains why the Seventh Circuit’s decision is contrary to the requirements of UCC §9-502(a) and §9-108 and will disrupt the public notice and search functionality of filed financing statements.
A decision on whether the Supreme Court will review the case is expected in the next few months. For more information, follow this link to read the brief MPM filed.
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This brief was filed by Morgan Pottinger McGarvey attorney Thurman Senn on behalf of law professors John McGarvey and William Henning of Texas A&M. McGarvey serves as chair and Henning as vice chair of the ULC’s UCC Committee. McGarvey is also a practicing shareholder with Morgan Pottinger McGarvey. He is a member of multiple Uniform Commercial Code task forces and advisory committees and has held a position on the UCC’s Permanent Editorial Board since 2015.