Strict Foreclosure Under New York Law—2.0
In this edition of her Secured Transactions column, Barbara M. Goodstein discusses '111 West 57th Inv. LLC v. 111 W57 Mezz Inv'r LLC', an Appellate Division ruling that is interesting for its interpretation as to the persons entitled to notice of and a right to object to a strict foreclosure under §§9-620 and 9-621. The case is also an important reminder to secured parties not to focus solely on the literal requirements of the Article 9 rules for strict foreclosure, but to keep in view the broader principles of the UCC.
June 02, 2021 at 12:45 PM
10 minute read
Late last year we discussed a recent New York Court of Appeals decision weighing the effect of certain indenture provisions on a purported strict foreclosure of collateral under the Uniform Commercial Code. See Goodstein, CNH Diversified (Marblegate 2.0) and Strict Foreclosure, 264 N.Y.L.J. 107 (Dec. 3, 2020)). In the CNH Diversified case, minority noteholders party to an indenture challenged a strict foreclosure, claiming that their consent was required under the terms of such indenture. That challenge was upheld by the Court of Appeals. More recently, the New York State Supreme Court Appellate Division, First Department, issued a ruling in yet another case challenging a UCC strict foreclosure. In this instance, the challenge to the foreclosure action was not sustained. In both cases, the parties had complied with the procedural requirements for strict foreclosure actions under Article 9 of the UCC.
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