Ucc Subordination Agreement
An example of the types of risks associated with a contractual solution and not with the filing of a UCC-3 financing statement can be found by checking whether a particular pledge agreement is binding for the assignment of the conflicting secured party. In the event of default under the financing agreement for orders, all claims that creditor B has with an account debtor, with the exception of those for which creditor B has obtained subordination, are held by creditor B in favour of creditor A and must remain separate for the benefit of creditor A. If only one subordination is available, some transactions may require understanding the additional issues associated with sophisticated but subordinated guidance in the applicable equipment, but lenders who generally rely on the priority of purchase money should be aware that these issues are usually present throughout their portfolio and are only worth considering in selected contexts. If you rely on the contractual guarantees offered by pledges and subordinate agreements, it is obvious that these forms must be carefully developed to include sufficient provisions to protect the lender, given that in many transactions market pressure may not allow the robust forms needed in other circumstances. A contractual solution like this can raise several theoretical issues that do not apply to a structural solution, such as filing a UCC-3 funding statement in public registries. Some examples of contractual issues are disputes over whether the pledge contract was duly approved, performed and delivered or whether the agreement of the conflicting secured party was supported by reasonable consideration. . . .