SB1692ham001 97TH GENERAL ASSEMBLY

Rep. Kenneth Dunkin

Filed: 4/25/2011

09700SB1692ham001 LRB097 06688 AEK 54554 a

AMENDMENT TO SENATE BILL 1692

AMENDMENT NO. ______. Amend Senate Bill 1692 by replacing everything after the enacting clause with the following:

"Section 5. The Uniform Commercial Code is amended by changing Section 9-510 and by adding Section 9-513A as follows:

(810 ILCS 5/9-510)

Sec. 9-510. Effectiveness of filed record.

(a) Filed record effective if authorized. A filed record is effective only to the extent that it was filed by a person that may file it under Section 9-509 or by the filing office under Section 9-513A.

(b) Authorization by one secured party of record. A record authorized by one secured party of record does not affect the financing statement with respect to another secured party of record.

(c) Continuation statement not timely filed. A continuation statement that is not filed within the six-month period prescribed by Section 9-515(d) is ineffective.

(Source: P.A. 91-893, eff. 7-1-01.)

(810 ILCS 5/9-513A new)

Sec. 9-513A. Termination of wrongfully filed financing statement; reinstatement.

(a) Qualified person. In this Section, the term "qualified person" means an individual who, at the time the financing statement referred to in subsection (b) was filed or within five years prior to the time of filing, either held a judicial or prosecutorial office in this State or was an elected or appointed official of this State.

(b) Application of this Section. This Section applies only with respect to a filed financing statement that (i) indicates that all secured parties of record are individuals, (ii) identifies as a debtor a qualified person, and (iii) was filed by an individual not entitled to do so under Section 9-509(a). If the financing statement identifies more than one debtor, the provisions of this Section apply only with respect to those debtors who are qualified persons.

(c) Affidavit of wrongful filing. A qualified person may file in the filing office a notarized affidavit, signed under penalty of perjury, that identifies a filed financing statement that indicates that all secured parties of record are individuals and states that (i) the affiant held a judicial or prosecutorial office in this State or was an elected or appointed official of this State at, or within five years prior to, the time the financing statement was filed, and (ii) the financing statement was filed by an individual not entitled to do so under Section 9-509(a). The Secretary of State shall adopt a form of affidavit for use under this Section.

(d) Termination statement by filing office. If an affidavit is filed under subsection (c), the filing office shall promptly file a termination statement with respect to the financing statement identified in the affidavit. The termination statement must indicate that it was filed pursuant to this Section. Except as provided in subsection (h) or (i), a termination statement filed under this subsection shall take effect 30 days after it is filed.

(e) No fee charged or refunded. The filing office shall not charge a fee for the filing of an affidavit under subsection (c) or a termination statement under subsection (d). The filing office shall not return any fee paid for filing the financing statement identified in the affidavit, whether or not the financing statement is reinstated under subsection (i).

(f) Notice of termination statement. On the same day that a filing office files a termination statement under subsection (d), it shall send to each secured party of record for the financing statement a notice advising the secured party of record that the termination statement has been filed. The notice shall be sent by certified mail, return receipt requested, to the address provided for the secured party in the financing statement.

(g) Action by secured party of record. An individual indicated as secured party of record on a financing statement as to which a termination statement has been filed under subsection (d) may, before or after the termination statement takes effect, bring an action against the individual who filed the affidavit under subsection (c) seeking a determination that the financing statement was filed by a person entitled to do so under Section 9-509(a). An action under this subsection shall have priority on the court's calendar and shall proceed by expedited hearing. If the individual who filed the affidavit resides in this State, the exclusive venue in this State for the action shall be in the circuit court for the county where the individual principally resides in this State. If the individual who filed the affidavit does not reside in this State, the exclusive venue in this State shall be in the circuit court for the county where the filing office in which the financing statement was filed is located.

(h) Preliminary relief. In an action brought pursuant to subsection (g), a court may, in appropriate circumstances, order preliminary relief, including but not limited to an order precluding the termination statement from taking effect or directing a party to take action to prevent the termination statement from taking effect. If the court issues such an order and the filing office receives a certified copy of the order before the termination statement takes effect as provided in subsection (d), the termination statement shall not take effect and the filing office shall promptly file an amendment to the financing statement that indicates that an order has prevented the termination statement from taking effect. If such an order ceases to be effective by reason of a subsequent order or a final judgment of that court or by an order issued by another court, and the filing office receives a certified copy of the subsequent judgment or order, the termination statement shall immediately be effective and the filing office shall file an amendment to the financing statement indicating that the termination statement is effective.

(i) Final judgment or order. If, in an action under subsection (g), the court determines that the financing statement was filed by a person entitled to do so under Section 9-509(a) and the filing office receives a certified copy of the court's final judgment or order before the termination statement takes effect, the termination statement shall not take effect and the filing office shall remove the termination statement and any amendments filed under subsection (h) from the files. If the filing office receives the certified copy after the termination statement takes effect and within 30 days after the final judgment or order was entered, the filing office shall promptly file an amendment to the financing statement that indicates that the financing statement has been reinstated.

(j) Effect of reinstatement. Except as provided in subsection (k), upon the filing of an amendment reinstating a financing statement under subsection (i) the effectiveness of the financing statement is retroactively reinstated and the financing statement shall be considered never to have been ineffective against all persons and for all purposes.

(k) Exception to subsection (i). A financing statement whose effectiveness is reinstated under subsection (i) shall not be effective as against a person that purchased the collateral in good faith to the extent the person gave new value, in reliance on the termination statement, between the time the termination statement was filed and the time of the filing of the record reinstating the financing statement.

(l) Liability for wrongful filing. If, in an action under subsection (g), the court declares that the financing statement was not filed by a person entitled to do so under Section 9-509(a), the qualified person may recover from the individual who brought the action the costs and expenses, including reasonable attorneys' fees, that the qualified person incurred in the action. This recovery is in addition to any recovery to which the qualified person is entitled under Section 9-625 or under law other than this Article.

(m) Action to compel removal of termination statement not precluded. This Section does not preclude an individual wrongfully identified as a debtor on a financing statement or an individual secured party of record from bringing an action under law other than this Act seeking appropriate relief.".