Commercial tort claims of a debtor can constitute valuable collateral for a secured party, provided, of course, the secured party’s lien on that collateral is properly created and perfected. Because tort claims are not ordinary-course assets of most debtors, they are generally not a focus of most secured parties. Nevertheless, commercial tort claims can arise, often unexpectedly, after a debtor experiences financial distress. Accordingly, as illustrated by the cases discussed below, secured creditors not only need to be knowledgeable about the peculiarities of obtaining liens on commercial tort claims, they need to be vigilant in monitoring that type of collateral.
The Uniform Commercial Code (UCC) treats commercial tort claims differently from other collateral. As a class of collateral, tort claims are not fully embraced by Article 9. Only some tort claims are covered by Article 9, and those that are eligible for coverage cannot be encumbered without adherence to a unique set of creation requirements.
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