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Funded Them? THE Bank0 Trustee Has Right To The TV Since They Seize
Funded Them? THE Bank0 Trustee Has Right To The TV Since They Seize
Funded Them? THE Bank0 Trustee Has Right To The TV Since They Seize
Lender lends 300 k to A, 200 k to B and 500 k to C. A , B and C all have collaterals.
Lender then assigns the loan to a corporation and then gets share against a loan
(bringing in monthly pymnts). *the flaw movie*
Another type of security is a conditional sale (it could secure it, not a promise). Mr X
will buy comp from Mr Y. Laptop is worth a $1000 , Mr X only gives $600 so he gets
possession of it but title isnt transferred to Mr X until full $1000 pymnt is received.
Why do we have security interest?
A) Procedure is faster (no need to go through all the court procedure all you need to
show if u do is the security which entitles you to it). B) Most importantly you get
Priority over other creditors.
What if another creditor registers a security interest on a loan before you
register one against same debtor, who gets it first?
First one who registers is at priority.
How do you know if you registered first?
Other ways in which security can arise. If it's a conditional sale you can get
security arising.
Situation 1.
A loans $ to B (A give 50k loan and u get back 60 X $1000 from B) - if default
take truck/if paid in full B keeps truck.
Situation 2.
Lease : A keeps title to truck and rent the truck to B for a 1000$/m and if B
default on any payments u take truck back. At the end of the lease B has
option to keep the truck for 1$.
The law says if it's really a finance lease then all u did is create a security
interest.
Ex:
didn't register the truck as SI all creditors get part of it. If lease is
over a year long PPSA can fall therefore register SI.
Ex: X(dbt)-----Vero(cd)
100K
What will X Co pledge to add up to 100k?
Their account receivables. So if X goes bank0 then Vero should get a piece of
paper stating X's debtor will now pay her to cover her 100k. Or even Vero
cud say I've got 50k of account receivable due in 60d so I'm gonna sell it to
Clayton for 45k since he taking a risk and Vero need the $ today.
Bank will ask for him to pledge everything the trucks the taco under
GSA( General Security Agreement).
Now Gergjo inc his company first then goes to the bank.
What might the Bank ask for in exchange? Personal Guarantee. If the
bank realize upon security (seize through the collateral)
GSA
On day 1 Georjo signs the GSA but has nothing, on day 2 gets the truck.
So can you give a SI to something you don't own yet?(Can bank goes
over it if Georjo goes Bank0)
Customers receive collateral free of SI-if you bought 100 tacos as a Cx from
Gergjo and he went Bank0, u as the Cx is free of collateral the bank can't
come after you.
What happens if Georjo sells the truck to Danielle. What's the risk
for Danielle?
If Georjo business default, the bank can go grab the asset which is the truck
from Danielle. Because the PPSA gives us the right to the truck.
Ontario GVT, so if Georjo has trucks in each province means do a search and
register SI in each province.
Bank act section 427 let bank cover all assets across Canada in one shot.
The landlord since he has the right of distress. Provided landlord has
followed all legal procedures can lock X out if premises seize wtv is inside the
premises sell it and give it to Bank trustee.
What if Mr X also has 20k in bank account, can Nancy take that?
Landlord only has access to what's within the premises so can't touch his
bank acct so yes Nancy has right to it.
What if X has a car that was purchased with that loan from Nancy
and uses it for his resto business took the car to Raquel the
mechanic who fixed the car but never got paid, what happens with
car if X goes bank0?
Raquel has a lien on the car she can sell it and give excess to bank trustee
Since there is a storage lien act that gives her right to do so.
In general GSA gives you first right to collection on collateral unless right
distress, deam trust funds(withheld taxes money from bank) or a lien.
1) Attachment:
Luka lends 100k to Luli -she owns a truck and pledged it.
Luli signed agreement with Luka but also with Thomas and she
pledged same truck. Who wins the truck ?
Luka registered SI first , Thomas (2nd creditor) finds out Luka was first and
gets bigger return of interest since he has more risk. However Thomas
should still register since Luli could get a 3rd creditor.
2) Perfection:
What can you do if a creditor (X) isn't happy with another creditor
being ahead of them (K) in SI order?
*p.586* footnote
Subordination agreement: X puts a 100k in line to guarantee that the co
won't go bank0 in exchange of K first place.
What if X and K are lending 250k to ABC at same time and agree if
co goes bank0 they agree to share equally?
There can only be one #1, so either X or K. But what they could do is sign a
"pari-passu" agreement which means no matter who registers it first this
states they agree to share it at same time if co goes bank0.
Bank loan 500k to James, james gave back GSA to bank which
perfected SI and ranked #1. James now struggling so Atousa gives
him a loan at lower rate and buy 2 trucks. James goes bank0 what
happens with 2 trucks?
Bank takes everything even if trucks purchased after GSA since it gives them
the right to all assets period.
*Exception*
Atousa financed the purchased of 2 trucks, in such case Atousa ranks higher
than the bank.
Dentist A sells all equipment to Dentist B and assets to dental practices. 1Mill
transaction. Dentist B realizes after a search bank has a GSA for 150
k on his business. What does dentist B does now?
Lawyer B says I give you Lawyer A the money in trust and Lawyer undertakes
tht he will take the mill pay the 150k GSA owed to bank and then give the
money to dentist A. This is called escrow.
No, in consumer transaction if consumer paid 2/3 of the item the store don't
have the right to seize it but they can still sue you. This is called reinstate.
Guarantor relived of liability if increase in risk was not consented to (eg son
increased his loc by 10k, guarantor only liable for initial amount not
+increase)