Protecting Lender Interest in Insurance Proceeds: Bankruptcy and UCC Considerations
Author: John Eggum.
Source: Volume 25, Number 02, November/December 2011 , pp.33-42(10)
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Abstract:
Lender expectations can be severely disrupted by the failure to give appropriate attention to perfecting interests in insurance proceeds. There are steps that commercial lenders and other financial institutions can take, however, to prevent the impairment of their interests. This article sets out the fundamentals of bankruptcy for lenders, explains their obligations under the law, and suggests effective controls that lenders can implement to verify perfection at the earliest, commercially reasonable point in time.Keywords: bankruptcy; insurance; Chapter 11; “commercial lending”; perfection defects; 11 U.S.C. Sec. 544 “strong arm” powers; executory vs. non-executory insurance contracts; UCC Sec. 9-315; UCC Sec. 9-322
Affiliations:
1: Butler Pappas Weihmuller Katz Craig LLP.