PEB Issues Report Concerning UCC § 9-705

In December the Permanent Editorial Board for the Uniform Commercial Code (PEB) issued a Report with respect to interpretive issues concerning § 9-705 of revised Article 9 of the Uniform Commercial Code (UCC). Revised Article 9 has been in effect since July 1, 2001, with the exception of nonuniform versions with later effective dates that were enacted in a few jurisdictions. Section 9-705(c) of revised Article 9 provides that a financing statement that was effective under former Article 9 of the UCC remains effective under revised Article 9, but only for a limited period. Under § 9-705(c), a pre-effective-date financing statement ceases being effective under revised Article 9 at the earlier of: (i) the time the financing statement would have ceased to be effective under the law of the jurisdiction in which it was filed; or (ii) June 30, 2006.

The PEB Report generally describes the effect of the June 30, 2006, cutoff date and the actions that secured parties may take to maintain the perfection of their security interests. In particular, it analyzes the effect of § 9-705 of revised Article 9 on the further continuation of certain financing statements that would have lapsed in the second half of 2001 (after the effective date of revised Article 9) but whose effectiveness was continued by the filing of a continuation statement in the first half of 2001 under former Article 9. As the June 30, 2006, cutoff date approaches, secured parties should plan carefully to ensure that the perfected status of their security interests that remained effective under § 9-705(c) of revised Article 9 continues after the cutoff date. Available on the ALI website at www.ali.org/ali/DEC2005PEB-report.pdf, the PEB Report analyzes how, when, and where the effectiveness of financing statements filed under former Article 9 should be continued.