The subjective intent of a secured lender is not relevant to a determination of whether a termination statement was effective under the Delaware Uniform Commercial Code (UCC) to terminate the secured lender’s perfected security interest, the Delaware Supreme Court has ruled.
The Delaware Supreme Court considered the issue as a question certified to it by the U.S. Court of Appeals for the Second Circuit in In re Motors Liquidation, 755 F.3d 78, 86 (2d Cir. 2014). The opinion serves as a reminder (and cautionary tale) for agents, lenders and their counsel to closely scrutinize not only transaction documents, but also financing statements and termination statements being filed as part of a closing.
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