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  • videocam On-Demand
  • signal_cellular_alt Intermediate
  • card_travel Banking and Finance
  • schedule 90 minutes

LLC and Partnership Transfer Restrictions and UCC Article 9 Overrides: Resolving the Conflict

$347.00

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Description

LLCs and partnerships have always embraced the "pick-your-partner principle," under which a statute or agreement restricts transfers of a member's or partner's ownership interest. In recent years, the pick-your-partner principle has interacted in complicated ways with Article 9. UCC 9-406 and 9-408 have sometimes overridden a broad range of statutory and agreement-based anti-assignment provisions, subject to some complex exceptions.

Application of these overrides varies depending on whether a financial transaction is an outright sale of a general intangible that is not a payment intangible, an ordinary security interest in a general intangible that is not a payment intangible, an outright sale of a payment intangible, or an ordinary security interest in a payment intangible. Counsel should have a thorough understanding of the operation of Article 9 in each scenario.

One established way for transactional lawyers to avoid the overrides altogether is to have the organization "opt-in" to Article 8 by adopting appropriate provisions in its organic documents. Related measures include providing for the security to be certificated or uncertificated and preventing the organization from opting back out of Article 8 without the parties' consent.

Recent UCC amendments would eliminate conflicts with the pick-your-partner principle that can remain despite the exceptions in Sections 9-406 and 9-408, without the need for an Article 8 opt-in. But the amendments need to be enacted in each state, and a conflict-of-laws question may arise if a transaction involves elements from multiple jurisdictions that have not all enacted the amendments.

Listen as our authoritative panel analyzes the complexities of "pick-your-partner" vs. the UCC override and discusses drafting and structuring solutions to avoid the conflict.

Presented By

Carl Bjerre
Kaapcke Professor of Business Law
University of Oregon

Professor Bjerre specializes in commercial law. Active in national and international projects to modernize commercial law, he is a member of the Permanent Editorial Board for the Uniform Commercial Code, the Uniform Law Commission, and the American Law Institute. He was a member of the United States delegation for the negotiation of the Geneva Securities Convention. Prior to joining the Oregon Law faculty, he practiced transactional finance law for six years with the multinational law firm of Cleary, Gottlieb, Steen & Hamilton LLP in New York.

Daniel S. Kleinberger
Emeritus Professor of Law
Mitchell Hamline School of Law

Professor Kleinberger is a consulting and testifying expert on business law and businesses practices. He has written several books including a leading national treatise on limited liability companies and a popular student treatise on agency, partnerships, and LLCs. Professor Kleinberger has been immersed in legislative drafting projects for more than two decades, and his scholarship and drafting work have been recognized by the National Conference of Commissioners on Uniform State Laws, the American Law Institute, the American Bar Association Committee on Limited Liability Companies, Partnerships and Unincorporated Entities, and the Section on Agency, Partnership, LLCs and Unincorporated Associations of the American Association of Law Schools.

Edwin E. Smith
Partner
Morgan, Lewis & Bockius LLP

Mr. Smith concentrates his practice in commercial law, debt financings, structured financings, workouts, bankruptcies, and international transactions. He is particularly knowledgeable on commercial law and insolvency matters, both domestic and cross-border. His representations have included those in major bankruptcies including Lehman and the City of Detroit. Mr. Smith often advises financial institutions on documentation and risk management issues.

Steven O. Weise
Partner
Proskauer Rose LLP

Mr. Weise practices in all areas of commercial law and has extensive experience in financing, especially in those secured by personal property, including structured financing. He is regarded as one of the foremost authorities on Article 9 of the UCC. He is a member of the Permanent Editorial Board for the UCC and a member of the American Law Institute’s UCC Article 9 Drafting Committee. Mr. Weise is also the past chair of the American Bar Association’s Business Law Section Legal Opinions Committee.

Credit Information
  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.


  • Live Online


    On Demand

Date + Time

  • event

    Wednesday, April 10, 2024

  • schedule

    1:00 p.m. ET./10:00 a.m. PT

  1. The policy behind the pick-your-partner principle
  2. Conflicting goals under UCC Article 9
  3. Navigating unamended 9-406 and 9-408
  4. Opting into Article 8
  5. Recent amendments, non-uniform amendments, and choice of law

The panel will review these and other crucial issues:

  • When and how does the pick-your-partner principle conflict with the goals of Article 9?
  • When might UCC 9-406 and 9-408 be found to override anti-assignment provisions in partnership and LLC agreements?
  • What are the appropriate steps for opting into Article 8 to avoid the override?
  • Assuming enactment of recent amendments, how should counsel address choice-of-law issues when a transaction has elements in multiple states?