Illinois General Assembly - Full Text of SB3764
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Full Text of SB3764  97th General Assembly

SB3764eng 97TH GENERAL ASSEMBLY



 


 
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1    AN ACT concerning business.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Uniform Commercial Code is amended by
5changing Sections 2A-103, 9-102, 9-105, 9-307, 9-311, 9-316,
69-317, 9-326, 9-406, 9-408, 9-502, 9-503, 9-507, 9-515, 9-516,
79-518, 9-521, 9-607, and 9-625 and by adding Part 8 to Article
89 as follows:
 
9    (810 ILCS 5/2A-103)  (from Ch. 26, par. 2A-103)
10    Sec. 2A-103. Definitions and index of definitions.
11    (1) In this Article unless the context otherwise requires:
12        (a) "Buyer in ordinary course of business" means a
13    person who, in good faith and without knowledge that the
14    sale to him or her is in violation of the ownership rights
15    or security interest or leasehold interest of a third party
16    in the goods, buys in ordinary course from a person in the
17    business of selling goods of that kind but does not include
18    a pawnbroker. "Buying" may be for cash or by exchange of
19    other property or on secured or unsecured credit and
20    includes acquiring goods or documents of title under a
21    pre-existing contract for sale but does not include a
22    transfer in bulk or as security for or in total or partial
23    satisfaction of a money debt.

 

 

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1        (b) "Cancellation" occurs when either party puts an end
2    to the lease contract for default by the other party.
3        (c) "Commercial unit" means such a unit of goods as by
4    commercial usage is a single whole for purposes of lease
5    and division of which materially impairs its character or
6    value on the market or in use. A commercial unit may be a
7    single article, as a machine, or a set of articles, as a
8    suite of furniture or a line of machinery, or a quantity,
9    as a gross or carload, or any other unit treated in use or
10    in the relevant market as a single whole.
11        (d) "Conforming" goods or performance under a lease
12    contract means goods or performance that are in accordance
13    with the obligations under the lease contract.
14        (e) "Consumer lease" means a lease that a lessor
15    regularly engaged in the business of leasing or selling
16    makes to a lessee who is an individual and who takes under
17    the lease primarily for a personal, family, or household
18    purpose, if the total payments to be made under the lease
19    contract, excluding payments for options to renew or buy,
20    do not exceed $40,000.
21        (f) "Fault" means wrongful act, omission, breach, or
22    default.
23        (g) "Finance lease" means a lease with respect to
24    which:
25            (i) the lessor does not select, manufacture, or
26        supply the goods;

 

 

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1            (ii) the lessor acquires the goods or the right to
2        possession and use of the goods in connection with the
3        lease; and
4            (iii) one of the following occurs:
5                (A) the lessee receives a copy of the contract
6            by which the lessor acquired the goods or the right
7            to possession and use of the goods before signing
8            the lease contract;
9                (B) the lessee's approval of the contract by
10            which the lessor acquired the goods or the right to
11            possession and use of the goods is a condition to
12            effectiveness of the lease contract;
13                (C) the lessee, before signing the lease
14            contract, receives an accurate and complete
15            statement designating the promises and warranties,
16            and any disclaimers of warranties, limitations or
17            modifications of remedies, or liquidated damages,
18            including those of a third party, such as the
19            manufacturer of the goods, provided to the lessor
20            by the person supplying the goods in connection
21            with or as part of the contract by which the lessor
22            acquired the goods or the right to possession and
23            use of the goods; or
24                (D) if the lease is not a consumer lease, the
25            lessor, before the lessee signs the lease
26            contract, informs the lessee in writing (a) of the

 

 

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1            identity of the person supplying the goods to the
2            lessor, unless the lessee has selected that person
3            and directed the lessor to acquire the goods or the
4            right to possession and use of the goods from that
5            person, (b) that the lessee is entitled under this
6            Article to the promises and warranties, including
7            those of any third party, provided to the lessor by
8            the person supplying the goods in connection with
9            or as part of the contract by which the lessor
10            acquired the goods or the right to possession and
11            use of the goods, and (c) that the lessee may
12            communicate with the person supplying the goods to
13            the lessor and receive an accurate and complete
14            statement of those promises and warranties,
15            including any disclaimers and limitations of them
16            or of remedies.
17        (h) "Goods" means all things that are movable at the
18    time of identification to the lease contract, or are
19    fixtures (Section 2A-309), but the term does not include
20    money, documents, instruments, accounts, chattel paper,
21    general intangibles, or minerals or the like, including oil
22    and gas, before extraction. The term also includes the
23    unborn young of animals.
24        (i) "Installment lease contract" means a lease
25    contract that authorizes or requires the delivery of goods
26    in separate lots to be separately accepted, even though the

 

 

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1    lease contract contains a clause "each delivery is a
2    separate lease" or its equivalent.
3        (j) "Lease" means a transfer of the right to possession
4    and use of goods for a term in return for consideration,
5    but a sale, including a sale on approval or a sale or
6    return, or retention or creation of a security interest is
7    not a lease. Unless the context clearly indicates
8    otherwise, the term includes a sublease.
9        (k) "Lease agreement" means the bargain, with respect
10    to the lease, of the lessor and the lessee in fact as found
11    in their language or by implication from other
12    circumstances including course of dealing or usage of trade
13    or course of performance as provided in this Article.
14    Unless the context clearly indicates otherwise, the term
15    includes a sublease agreement.
16        (l) "Lease contract" means the total legal obligation
17    that results from the lease agreement as affected by this
18    Article and any other applicable rules of law. Unless the
19    context clearly indicates otherwise, the term includes a
20    sublease contract.
21        (m) "Leasehold interest" means the interest of the
22    lessor or the lessee under a lease contract.
23        (n) "Lessee" means a person who acquires the right to
24    possession and use of goods under a lease. Unless the
25    context clearly indicates otherwise, the term includes a
26    sublessee.

 

 

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1        (o) "Lessee in ordinary course of business" means a
2    person who in good faith and without knowledge that the
3    lease to him or her is in violation of the ownership rights
4    or security interest or leasehold interest of a third party
5    in the goods leases in ordinary course from a person in the
6    business of selling or leasing goods of that kind but does
7    not include a pawnbroker. "Leasing" may be for cash or by
8    exchange of other property or on secured or unsecured
9    credit and includes acquiring goods or documents of title
10    under a pre-existing lease contract but does not include a
11    transfer in bulk or as security for or in total or partial
12    satisfaction of a money debt.
13        (p) "Lessor" means a person who transfers the right to
14    possession and use of goods under a lease. Unless the
15    context clearly indicates otherwise, the term includes a
16    sublessor.
17        (q) "Lessor's residual interest" means the lessor's
18    interest in the goods after expiration, termination, or
19    cancellation of the lease contract.
20        (r) "Lien" means a charge against or interest in goods
21    to secure payment of a debt or performance of an
22    obligation, but the term does not include a security
23    interest.
24        (s) "Lot" means a parcel or a single article that is
25    the subject matter of a separate lease or delivery, whether
26    or not it is sufficient to perform the lease contract.

 

 

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1        (t) "Merchant lessee" means a lessee that is a merchant
2    with respect to goods of the kind subject to the lease.
3        (u) "Present value" means the amount as of a date
4    certain of one or more sums payable in the future,
5    discounted to the date certain. The discount is determined
6    by the interest rate specified by the parties if the rate
7    was not manifestly unreasonable at the time the transaction
8    was entered into; otherwise, the discount is determined by
9    a commercially reasonable rate that takes into account the
10    facts and circumstances of each case at the time the
11    transaction was entered into.
12        (v) "Purchase" includes taking by sale, lease,
13    mortgage, security interest, pledge, gift, or any other
14    voluntary transaction creating an interest in goods.
15        (w) "Sublease" means a lease of goods the right to
16    possession and use of which was acquired by the lessor as a
17    lessee under an existing lease.
18        (x) "Supplier" means a person from whom a lessor buys
19    or leases goods to be leased under a finance lease.
20        (y) "Supply contract" means a contract under which a
21    lessor buys or leases goods to be leased.
22        (z) "Termination" occurs when either party pursuant to
23    a power created by agreement or law puts an end to the
24    lease contract otherwise than for default.
25    (2) Other definitions applying to this Article and the
26Sections in which they appear are:

 

 

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1    "Accessions". Section 2A-310(1).
2    "Construction mortgage". Section 2A-309(1)(d).
3    "Encumbrance". Section 2A-309(1)(e).
4    "Fixtures". Section 2A-309(1)(a).
5    "Fixture filing". Section 2A-309(1)(b).
6    "Purchase money lease". Section 2A-309(1)(c).
7    (3) The following definitions in other Articles apply to
8this Article:
9    "Account". Section 9-102(a)(2).
10    "Between merchants". Section 2-104(3).
11    "Buyer". Section 2-103(1)(a).
12    "Chattel paper". Section 9-102(a)(11).
13    "Consumer goods". Section 9-102(a)(23).
14    "Document". Section 9-102(a)(30).
15    "Entrusting". Section 2-403(3).
16    "General intangible". Section 9-102(a)(42).
17    "Good faith". Section 2-103(1)(b).
18    "Instrument". Section 9-102(a)(47).
19    "Merchant". Section 2-104(1).
20    "Mortgage". Section 9-102(a)(55).
21    "Pursuant to commitment". Section 9-102(a)(69)
229-102(a)(68).
23    "Receipt". Section 2-103(1)(c).
24    "Sale". Section 2-106(1).
25    "Sale on approval". Section 2-326.
26    "Sale or return". Section 2-326.

 

 

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1    "Seller". Section 2-103(1)(d).
2    (4) In addition, Article 1 contains general definitions and
3principles of construction and interpretation applicable
4throughout this Article.
5(Source: P.A. 95-895, eff. 1-1-09.)
 
6    (810 ILCS 5/9-102)  (from Ch. 26, par. 9-102)
7    Sec. 9-102. Definitions and index of definitions.
8    (a) Article 9 definitions. In this Article:
9        (1) "Accession" means goods that are physically united
10    with other goods in such a manner that the identity of the
11    original goods is not lost.
12        (2) "Account", except as used in "account for", means a
13    right to payment of a monetary obligation, whether or not
14    earned by performance, (i) for property that has been or is
15    to be sold, leased, licensed, assigned, or otherwise
16    disposed of, (ii) for services rendered or to be rendered,
17    (iii) for a policy of insurance issued or to be issued,
18    (iv) for a secondary obligation incurred or to be incurred,
19    (v) for energy provided or to be provided, (vi) for the use
20    or hire of a vessel under a charter or other contract,
21    (vii) arising out of the use of a credit or charge card or
22    information contained on or for use with the card, or
23    (viii) as winnings in a lottery or other game of chance
24    operated or sponsored by a State, governmental unit of a
25    State, or person licensed or authorized to operate the game

 

 

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1    by a State or governmental unit of a State. The term
2    includes health-care-insurance receivables. The term does
3    not include (i) rights to payment evidenced by chattel
4    paper or an instrument, (ii) commercial tort claims, (iii)
5    deposit accounts, (iv) investment property, (v)
6    letter-of-credit rights or letters of credit, or (vi)
7    rights to payment for money or funds advanced or sold,
8    other than rights arising out of the use of a credit or
9    charge card or information contained on or for use with the
10    card.
11        (3) "Account debtor" means a person obligated on an
12    account, chattel paper, or general intangible. The term
13    does not include persons obligated to pay a negotiable
14    instrument, even if the instrument constitutes part of
15    chattel paper.
16        (4) "Accounting", except as used in "accounting for",
17    means a record:
18            (A) authenticated by a secured party;
19            (B) indicating the aggregate unpaid secured
20        obligations as of a date not more than 35 days earlier
21        or 35 days later than the date of the record; and
22            (C) identifying the components of the obligations
23        in reasonable detail.
24        (5) "Agricultural lien" means an interest, other than a
25    security interest, in farm products:
26            (A) which secures payment or performance of an

 

 

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1        obligation for goods or services furnished in
2        connection with a debtor's farming operation;
3            (B) which is created by statute in favor of a
4        person that in the ordinary course of its business
5        furnished goods or services to a debtor in connection
6        with a debtor's farming operation; and
7            (C) whose effectiveness does not depend on the
8        person's possession of the personal property.
9        (6) "As-extracted collateral" means:
10            (A) oil, gas, or other minerals that are subject to
11        a security interest that:
12                (i) is created by a debtor having an interest
13            in the minerals before extraction; and
14                (ii) attaches to the minerals as extracted; or
15            (B) accounts arising out of the sale at the
16        wellhead or minehead of oil, gas, or other minerals in
17        which the debtor had an interest before extraction.
18        (7) "Authenticate" means:
19            (A) to sign; or
20            (B) with present intent to adopt or accept a
21        record, to attach to or logically associate with the
22        record an electronic sound, symbol, or process to
23        execute or otherwise adopt a symbol, or encrypt or
24        similarly process a record in whole or in part, with
25        the present intent of the authenticating person to
26        identify the person and adopt or accept a record.

 

 

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1        (8) "Bank" means an organization that is engaged in the
2    business of banking. The term includes savings banks,
3    savings and loan associations, credit unions, and trust
4    companies.
5        (9) "Cash proceeds" means proceeds that are money,
6    checks, deposit accounts, or the like.
7        (10) "Certificate of title" means a certificate of
8    title with respect to which a statute provides for the
9    security interest in question to be indicated on the
10    certificate as a condition or result of the security
11    interest's obtaining priority over the rights of a lien
12    creditor with respect to the collateral. The term includes
13    another record maintained as an alternative to a
14    certificate of title by the governmental unit that issues
15    certificates of title if a statute permits the security
16    interest in question to be indicated on the record as a
17    condition or result of the security interest's obtaining
18    priority over the rights of a lien creditor with respect to
19    the collateral.
20        (11) "Chattel paper" means a record or records that
21    evidence both a monetary obligation and a security interest
22    in specific goods, a security interest in specific goods
23    and software used in the goods, a security interest in
24    specific goods and license of software used in the goods, a
25    lease of specific goods, or a lease of specified goods and
26    a license of software used in the goods. In this paragraph,

 

 

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1    "monetary obligation" means a monetary obligation secured
2    by the goods or owed under a lease of the goods and
3    includes a monetary obligation with respect to software
4    used in the goods. The term does not include (i) charters
5    or other contracts involving the use or hire of a vessel or
6    (ii) records that evidence a right to payment arising out
7    of the use of a credit or charge card or information
8    contained on or for use with the card. If a transaction is
9    evidenced by records that include an instrument or series
10    of instruments, the group of records taken together
11    constitutes chattel paper.
12        (12) "Collateral" means the property subject to a
13    security interest or agricultural lien. The term includes:
14            (A) proceeds to which a security interest
15        attaches;
16            (B) accounts, chattel paper, payment intangibles,
17        and promissory notes that have been sold; and
18            (C) goods that are the subject of a consignment.
19        (13) "Commercial tort claim" means a claim arising in
20    tort with respect to which:
21            (A) the claimant is an organization; or
22            (B) the claimant is an individual and the claim:
23                (i) arose in the course of the claimant's
24            business or profession; and
25                (ii) does not include damages arising out of
26            personal injury to or the death of an individual.

 

 

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1        (14) "Commodity account" means an account maintained
2    by a commodity intermediary in which a commodity contract
3    is carried for a commodity customer.
4        (15) "Commodity contract" means a commodity futures
5    contract, an option on a commodity futures contract, a
6    commodity option, or another contract if the contract or
7    option is:
8            (A) traded on or subject to the rules of a board of
9        trade that has been designated as a contract market for
10        such a contract pursuant to federal commodities laws;
11        or
12            (B) traded on a foreign commodity board of trade,
13        exchange, or market, and is carried on the books of a
14        commodity intermediary for a commodity customer.
15        (16) "Commodity customer" means a person for which a
16    commodity intermediary carries a commodity contract on its
17    books.
18        (17) "Commodity intermediary" means a person that:
19            (A) is registered as a futures commission merchant
20        under federal commodities law; or
21            (B) in the ordinary course of its business provides
22        clearance or settlement services for a board of trade
23        that has been designated as a contract market pursuant
24        to federal commodities law.
25        (18) "Communicate" means:
26            (A) to send a written or other tangible record;

 

 

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1            (B) to transmit a record by any means agreed upon
2        by the persons sending and receiving the record; or
3            (C) in the case of transmission of a record to or
4        by a filing office, to transmit a record by any means
5        prescribed by filing-office rule.
6        (19) "Consignee" means a merchant to which goods are
7    delivered in a consignment.
8        (20) "Consignment" means a transaction, regardless of
9    its form, in which a person delivers goods to a merchant
10    for the purpose of sale and:
11            (A) the merchant:
12                (i) deals in goods of that kind under a name
13            other than the name of the person making delivery;
14                (ii) is not an auctioneer; and
15                (iii) is not generally known by its creditors
16            to be substantially engaged in selling the goods of
17            others;
18            (B) with respect to each delivery, the aggregate
19        value of the goods is $1,000 or more at the time of
20        delivery;
21            (C) the goods are not consumer goods immediately
22        before delivery; and
23            (D) the transaction does not create a security
24        interest that secures an obligation.
25        (21) "Consignor" means a person that delivers goods to
26    a consignee in a consignment.

 

 

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1        (22) "Consumer debtor" means a debtor in a consumer
2    transaction.
3        (23) "Consumer goods" means goods that are used or
4    bought for use primarily for personal, family, or household
5    purposes.
6        (24) "Consumer-goods transaction" means a consumer
7    transaction in which:
8            (A) an individual incurs an obligation primarily
9        for personal, family, or household purposes; and
10            (B) a security interest in consumer goods secures
11        the obligation.
12        (25) "Consumer obligor" means an obligor who is an
13    individual and who incurred the obligation as part of a
14    transaction entered into primarily for personal, family,
15    or household purposes.
16        (26) "Consumer transaction" means a transaction in
17    which (i) an individual incurs an obligation primarily for
18    personal, family, or household purposes, (ii) a security
19    interest secures the obligation, and (iii) the collateral
20    is held or acquired primarily for personal, family, or
21    household purposes. The term includes consumer-goods
22    transactions.
23        (27) "Continuation statement" means an amendment of a
24    financing statement which:
25            (A) identifies, by its file number, the initial
26        financing statement to which it relates; and

 

 

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1            (B) indicates that it is a continuation statement
2        for, or that it is filed to continue the effectiveness
3        of, the identified financing statement.
4        (28) "Debtor" means:
5            (A) a person having an interest, other than a
6        security interest or other lien, in the collateral,
7        whether or not the person is an obligor;
8            (B) a seller of accounts, chattel paper, payment
9        intangibles, or promissory notes; or
10            (C) a consignee.
11        (29) "Deposit account" means a demand, time, savings,
12    passbook, nonnegotiable certificates of deposit,
13    uncertificated certificates of deposit, nontransferrable
14    certificates of deposit, or similar account maintained
15    with a bank. The term does not include investment property
16    or accounts evidenced by an instrument.
17        (30) "Document" means a document of title or a receipt
18    of the type described in Section 7-201(b).
19        (31) "Electronic chattel paper" means chattel paper
20    evidenced by a record or records consisting of information
21    stored in an electronic medium.
22        (32) "Encumbrance" means a right, other than an
23    ownership interest, in real property. The term includes
24    mortgages and other liens on real property.
25        (33) "Equipment" means goods other than inventory,
26    farm products, or consumer goods.

 

 

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1        (34) "Farm products" means goods, other than standing
2    timber, with respect to which the debtor is engaged in a
3    farming operation and which are:
4            (A) crops grown, growing, or to be grown,
5        including:
6                (i) crops produced on trees, vines, and
7            bushes; and
8                (ii) aquatic goods produced in aquacultural
9            operations;
10            (B) livestock, born or unborn, including aquatic
11        goods produced in aquacultural operations;
12            (C) supplies used or produced in a farming
13        operation; or
14            (D) products of crops or livestock in their
15        unmanufactured states.
16        (35) "Farming operation" means raising, cultivating,
17    propagating, fattening, grazing, or any other farming,
18    livestock, or aquacultural operation.
19        (36) "File number" means the number assigned to an
20    initial financing statement pursuant to Section 9-519(a).
21        (37) "Filing office" means an office designated in
22    Section 9-501 as the place to file a financing statement.
23        (38) "Filing-office rule" means a rule adopted
24    pursuant to Section 9-526.
25        (39) "Financing statement" means a record or records
26    composed of an initial financing statement and any filed

 

 

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1    record relating to the initial financing statement.
2        (40) "Fixture filing" means the filing of a financing
3    statement covering goods that are or are to become fixtures
4    and satisfying Section 9-502(a) and (b). The term includes
5    the filing of a financing statement covering goods of a
6    transmitting utility which are or are to become fixtures.
7        (41) "Fixtures" means goods that have become so related
8    to particular real property that an interest in them arises
9    under real property law.
10        (42) "General intangible" means any personal property,
11    including things in action, other than accounts, chattel
12    paper, commercial tort claims, deposit accounts,
13    documents, goods, instruments, investment property,
14    letter-of-credit rights, letters of credit, money, and
15    oil, gas, or other minerals before extraction. The term
16    includes payment intangibles and software.
17        (43) "Good faith" means honesty in fact and the
18    observance of reasonable commercial standards of fair
19    dealing.
20        (44) "Goods" means all things that are movable when a
21    security interest attaches. The term includes (i)
22    fixtures, (ii) standing timber that is to be cut and
23    removed under a conveyance or contract for sale, (iii) the
24    unborn young of animals, (iv) crops grown, growing, or to
25    be grown, even if the crops are produced on trees, vines,
26    or bushes, and (v) manufactured homes. The term also

 

 

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1    includes a computer program embedded in goods and any
2    supporting information provided in connection with a
3    transaction relating to the program if (i) the program is
4    associated with the goods in such a manner that it
5    customarily is considered part of the goods, or (ii) by
6    becoming the owner of the goods, a person acquires a right
7    to use the program in connection with the goods. The term
8    does not include a computer program embedded in goods that
9    consist solely of the medium in which the program is
10    embedded. The term also does not include accounts, chattel
11    paper, commercial tort claims, deposit accounts,
12    documents, general intangibles, instruments, investment
13    property, letter-of-credit rights, letters of credit,
14    money, or oil, gas, or other minerals before extraction.
15        (45) "Governmental unit" means a subdivision, agency,
16    department, county, parish, municipality, or other unit of
17    the government of the United States, a State, or a foreign
18    country. The term includes an organization having a
19    separate corporate existence if the organization is
20    eligible to issue debt on which interest is exempt from
21    income taxation under the laws of the United States.
22        (46) "Health-care-insurance receivable" means an
23    interest in or claim under a policy of insurance which is a
24    right to payment of a monetary obligation for health-care
25    goods or services provided.
26        (47) "Instrument" means a negotiable instrument or any

 

 

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1    other writing that evidences a right to the payment of a
2    monetary obligation, is not itself a security agreement or
3    lease, and is of a type that in ordinary course of business
4    is transferred by delivery with any necessary indorsement
5    or assignment. The term does not include (i) investment
6    property, (ii) letters of credit, (iii) nonnegotiable
7    certificates of deposit, (iv) uncertificated certificates
8    of deposit, (v) nontransferrable certificates of deposit,
9    or (vi) writings that evidence a right to payment arising
10    out of the use of a credit or charge card or information
11    contained on or for use with the card.
12        (48) "Inventory" means goods, other than farm
13    products, which:
14            (A) are leased by a person as lessor;
15            (B) are held by a person for sale or lease or to be
16        furnished under a contract of service;
17            (C) are furnished by a person under a contract of
18        service; or
19            (D) consist of raw materials, work in process, or
20        materials used or consumed in a business.
21        (49) "Investment property" means a security, whether
22    certificated or uncertificated, security entitlement,
23    securities account, commodity contract, or commodity
24    account.
25        (50) "Jurisdiction of organization", with respect to a
26    registered organization, means the jurisdiction under

 

 

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1    whose law the organization is formed or organized.
2        (51) "Letter-of-credit right" means a right to payment
3    or performance under a letter of credit, whether or not the
4    beneficiary has demanded or is at the time entitled to
5    demand payment or performance. The term does not include
6    the right of a beneficiary to demand payment or performance
7    under a letter of credit.
8        (52) "Lien creditor" means:
9            (A) a creditor that has acquired a lien on the
10        property involved by attachment, levy, or the like;
11            (B) an assignee for benefit of creditors from the
12        time of assignment;
13            (C) a trustee in bankruptcy from the date of the
14        filing of the petition; or
15            (D) a receiver in equity from the time of
16        appointment.
17        (53) "Manufactured home" means a factory-assembled,
18    completely integrated structure designed for permanent
19    habitation, with a permanent chassis, and so constructed as
20    to permit its transport, on wheels temporarily or
21    permanently attached to its frame, and is a movable or
22    portable unit that is (i) 8 body feet or more in width,
23    (ii) 40 body feet or more in length, and (iii) 320 or more
24    square feet, constructed to be towed on its own chassis
25    (comprised of frame and wheels) from the place of its
26    construction to the location, or subsequent locations, at

 

 

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1    which it is installed and set up according to the
2    manufacturer's instructions and connected to utilities for
3    year-round occupancy for use as a permanent habitation, and
4    designed and situated so as to permit its occupancy as a
5    dwelling place for one or more persons. The term shall
6    include units containing parts that may be folded,
7    collapsed, or telescoped when being towed and that may be
8    expected to provide additional cubic capacity, and that are
9    designed to be joined into one integral unit capable of
10    being separated again into the components for repeated
11    towing. The term shall exclude campers and recreational
12    vehicles.
13        (54) "Manufactured-home transaction" means a secured
14    transaction:
15            (A) that creates a purchase-money security
16        interest in a manufactured home, other than a
17        manufactured home held as inventory; or
18            (B) in which a manufactured home, other than a
19        manufactured home held as inventory, is the primary
20        collateral.
21        (55) "Mortgage" means a consensual interest in real
22    property, including fixtures, which secures payment or
23    performance of an obligation.
24        (56) "New debtor" means a person that becomes bound as
25    debtor under Section 9-203(d) by a security agreement
26    previously entered into by another person.

 

 

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1        (57) "New value" means (i) money, (ii) money's worth in
2    property, services, or new credit, or (iii) release by a
3    transferee of an interest in property previously
4    transferred to the transferee. The term does not include an
5    obligation substituted for another obligation.
6        (58) "Noncash proceeds" means proceeds other than cash
7    proceeds.
8        (59) "Obligor" means a person that, with respect to an
9    obligation secured by a security interest in or an
10    agricultural lien on the collateral, (i) owes payment or
11    other performance of the obligation, (ii) has provided
12    property other than the collateral to secure payment or
13    other performance of the obligation, or (iii) is otherwise
14    accountable in whole or in part for payment or other
15    performance of the obligation. The term does not include
16    issuers or nominated persons under a letter of credit.
17        (60) "Original debtor", except as used in Section
18    9-310(c), means a person that, as debtor, entered into a
19    security agreement to which a new debtor has become bound
20    under Section 9-203(d).
21        (61) "Payment intangible" means a general intangible
22    under which the account debtor's principal obligation is a
23    monetary obligation.
24        (62) "Person related to", with respect to an
25    individual, means:
26            (A) the spouse of the individual;

 

 

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1            (B) a brother, brother-in-law, sister, or
2        sister-in-law of the individual;
3            (C) an ancestor or lineal descendant of the
4        individual or the individual's spouse; or
5            (D) any other relative, by blood or marriage, of
6        the individual or the individual's spouse who shares
7        the same home with the individual.
8        (63) "Person related to", with respect to an
9    organization, means:
10            (A) a person directly or indirectly controlling,
11        controlled by, or under common control with the
12        organization;
13            (B) an officer or director of, or a person
14        performing similar functions with respect to, the
15        organization;
16            (C) an officer or director of, or a person
17        performing similar functions with respect to, a person
18        described in subparagraph (A);
19            (D) the spouse of an individual described in
20        subparagraph (A), (B), or (C); or
21            (E) an individual who is related by blood or
22        marriage to an individual described in subparagraph
23        (A), (B), (C), or (D) and shares the same home with the
24        individual.
25        (64) "Proceeds", except as used in Section 9-609(b),
26    means the following property:

 

 

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1            (A) whatever is acquired upon the sale, lease,
2        license, exchange, or other disposition of collateral;
3            (B) whatever is collected on, or distributed on
4        account of, collateral;
5            (C) rights arising out of collateral;
6            (D) to the extent of the value of collateral,
7        claims arising out of the loss, nonconformity, or
8        interference with the use of, defects or infringement
9        of rights in, or damage to, the collateral; or
10            (E) to the extent of the value of collateral and to
11        the extent payable to the debtor or the secured party,
12        insurance payable by reason of the loss or
13        nonconformity of, defects or infringement of rights
14        in, or damage to, the collateral.
15        (65) "Promissory note" means an instrument that
16    evidences a promise to pay a monetary obligation, does not
17    evidence an order to pay, and does not contain an
18    acknowledgment by a bank that the bank has received for
19    deposit a sum of money or funds.
20        (66) "Proposal" means a record authenticated by a
21    secured party which includes the terms on which the secured
22    party is willing to accept collateral in full or partial
23    satisfaction of the obligation it secures pursuant to
24    Sections 9-620, 9-621, and 9-622.
25        (67) "Public-finance transaction" means a secured
26    transaction in connection with which:

 

 

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1            (A) debt securities are issued;
2            (B) all or a portion of the securities issued have
3        an initial stated maturity of at least 20 years; and
4            (C) the debtor, obligor, secured party, account
5        debtor or other person obligated on collateral,
6        assignor or assignee of a secured obligation, or
7        assignor or assignee of a security interest is a State
8        or a governmental unit of a State.
9        (68) "Public organic record" means a record that is
10    available to the public for inspection and is:
11            (A) a record consisting of the record initially
12        filed with or issued by a State or the United States to
13        form or organize an organization and any record filed
14        with or issued by the State or the United States which
15        amends or restates the initial record;
16            (B) an organic record of a business trust
17        consisting of the record initially filed with a State
18        and any record filed with the State which amends or
19        restates the initial record, if a statute of the State
20        governing business trusts requires that the record be
21        filed with the State; or
22            (C) a record consisting of legislation enacted by
23        the legislature of a State or the Congress of the
24        United States which forms or organizes an
25        organization, any record amending the legislation, and
26        any record filed with or issued by the State or the

 

 

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1        United States which amends or restates the name of the
2        organization.
3        (69) (68) "Pursuant to commitment", with respect to an
4    advance made or other value given by a secured party, means
5    pursuant to the secured party's obligation, whether or not
6    a subsequent event of default or other event not within the
7    secured party's control has relieved or may relieve the
8    secured party from its obligation.
9        (70) (69) "Record", except as used in "for record", "of
10    record", "record or legal title", and "record owner", means
11    information that is inscribed on a tangible medium or which
12    is stored in an electronic or other medium and is
13    retrievable in perceivable form.
14        (71) (70) "Registered organization" means an
15    organization formed or organized solely under the law of a
16    single State or the United States by the filing of a public
17    organic record with, the issuance of a public organic
18    record by, or the enactment of legislation by the State or
19    the United States. The term includes a business trust that
20    is formed or organized under the law of a single State if a
21    statute of the State governing business trusts requires
22    that the business trust's organic record be filed with the
23    State and as to which the State or the United States must
24    maintain a public record showing the organization to have
25    been organized.
26        (72) (71) "Secondary obligor" means an obligor to the

 

 

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1    extent that:
2            (A) the obligor's obligation is secondary; or
3            (B) the obligor has a right of recourse with
4        respect to an obligation secured by collateral against
5        the debtor, another obligor, or property of either.
6        (73) (72) "Secured party" means:
7            (A) a person in whose favor a security interest is
8        created or provided for under a security agreement,
9        whether or not any obligation to be secured is
10        outstanding;
11            (B) a person that holds an agricultural lien;
12            (C) a consignor;
13            (D) a person to which accounts, chattel paper,
14        payment intangibles, or promissory notes have been
15        sold;
16            (E) a trustee, indenture trustee, agent,
17        collateral agent, or other representative in whose
18        favor a security interest or agricultural lien is
19        created or provided for; or
20            (F) a person that holds a security interest arising
21        under Section 2-401, 2-505, 2-711(3), 2A-508(5),
22        4-210, or 5-118.
23        (74) (73) "Security agreement" means an agreement that
24    creates or provides for a security interest.
25        (75) (74) "Send", in connection with a record or
26    notification, means:

 

 

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1            (A) to deposit in the mail, deliver for
2        transmission, or transmit by any other usual means of
3        communication, with postage or cost of transmission
4        provided for, addressed to any address reasonable
5        under the circumstances; or
6            (B) to cause the record or notification to be
7        received within the time that it would have been
8        received if properly sent under subparagraph (A).
9        (76) (75) "Software" means a computer program and any
10    supporting information provided in connection with a
11    transaction relating to the program. The term does not
12    include a computer program that is included in the
13    definition of goods.
14        (77) (76) "State" means a State of the United States,
15    the District of Columbia, Puerto Rico, the United States
16    Virgin Islands, or any territory or insular possession
17    subject to the jurisdiction of the United States.
18        (78) (77) "Supporting obligation" means a
19    letter-of-credit right or secondary obligation that
20    supports the payment or performance of an account, chattel
21    paper, a document, a general intangible, an instrument, or
22    investment property.
23        (79) (78) "Tangible chattel paper" means chattel paper
24    evidenced by a record or records consisting of information
25    that is inscribed on a tangible medium.
26        (80) (79) "Termination statement" means an amendment

 

 

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1    of a financing statement which:
2            (A) identifies, by its file number, the initial
3        financing statement to which it relates; and
4            (B) indicates either that it is a termination
5        statement or that the identified financing statement
6        is no longer effective.
7        (81) (80) "Transmitting utility" means a person
8    primarily engaged in the business of:
9            (A) operating a railroad, subway, street railway,
10        or trolley bus;
11            (B) transmitting communications electrically,
12        electromagnetically, or by light;
13            (C) transmitting goods by pipeline or sewer; or
14            (D) transmitting or producing and transmitting
15        electricity, steam, gas, or water.
16    (b) Definitions in other Articles. "Control" as provided in
17Section 7-106 and the following definitions in other Articles
18apply to this Article:
19    "Applicant". Section 5-102.
20    "Beneficiary". Section 5-102.
21    "Broker". Section 8-102.
22    "Certificated security". Section 8-102.
23    "Check". Section 3-104.
24    "Clearing corporation". Section 8-102.
25    "Contract for sale". Section 2-106.
26    "Customer". Section 4-104.

 

 

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1    "Entitlement holder". Section 8-102.
2    "Financial asset". Section 8-102.
3    "Holder in due course". Section 3-302.
4    "Issuer" (with respect to a letter of credit or
5letter-of-credit right). Section 5-102.
6    "Issuer" (with respect to a security). Section 8-201.
7    "Issuer" (with respect to documents of title). Section
87-102.
9    "Lease". Section 2A-103.
10    "Lease agreement". Section 2A-103.
11    "Lease contract". Section 2A-103.
12    "Leasehold interest". Section 2A-103.
13    "Lessee". Section 2A-103.
14    "Lessee in ordinary course of business". Section 2A-103.
15    "Lessor". Section 2A-103.
16    "Lessor's residual interest". Section 2A-103.
17    "Letter of credit". Section 5-102.
18    "Merchant". Section 2-104.
19    "Negotiable instrument". Section 3-104.
20    "Nominated person". Section 5-102.
21    "Note". Section 3-104.
22    "Proceeds of a letter of credit". Section 5-114.
23    "Prove". Section 3-103.
24    "Sale". Section 2-106.
25    "Securities account". Section 8-501.
26    "Securities intermediary". Section 8-102.

 

 

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1    "Security". Section 8-102.
2    "Security certificate". Section 8-102.
3    "Security entitlement". Section 8-102.
4    "Uncertificated security". Section 8-102.
5    (c) Article 1 definitions and principles. Article 1
6contains general definitions and principles of construction
7and interpretation applicable throughout this Article.
8(Source: P.A. 95-895, eff. 1-1-09; 96-1477, eff. 1-1-11.)
 
9    (810 ILCS 5/9-105)  (from Ch. 26, par. 9-105)
10    Sec. 9-105. Control of electronic chattel paper.
11    (a) General rule: Control of electronic chattel paper. A
12secured party has control of electronic chattel paper if a
13system employed for evidencing the transfer of interests in the
14chattel paper reliably establishes the secured party as the
15person to which the chattel paper was assigned.
16    (b) Specific facts giving control. A system satisfies
17subsection (a) if the record or records comprising the chattel
18paper are created, stored, and assigned in such a manner that:
19        (1) a single authoritative copy of the record or
20    records exists which is unique, identifiable and, except as
21    otherwise provided in paragraphs (4), (5), and (6),
22    unalterable;
23        (2) the authoritative copy identifies the secured
24    party as the assignee of the record or records;
25        (3) the authoritative copy is communicated to and

 

 

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1    maintained by the secured party or its designated
2    custodian;
3        (4) copies or amendments revisions that add or change
4    an identified assignee of the authoritative copy can be
5    made only with the consent participation of the secured
6    party;
7        (5) each copy of the authoritative copy and any copy of
8    a copy is readily identifiable as a copy that is not the
9    authoritative copy; and
10        (6) any amendment revision of the authoritative copy is
11    readily identifiable as an authorized or unauthorized
12    revision.
13(Source: P.A. 90-665, eff. 7-30-98; 91-893, eff. 7-1-01.)
 
14    (810 ILCS 5/9-307)  (from Ch. 26, par. 9-307)
15    Sec. 9-307. Location of debtor.
16    (a) "Place of business." In this Section, "place of
17business" means a place where a debtor conducts its affairs.
18    (b) Debtor's location: general rules. Except as otherwise
19provided in this Section, the following rules determine a
20debtor's location:
21        (1) A debtor who is an individual is located at the
22    individual's principal residence.
23        (2) A debtor that is an organization and has only one
24    place of business is located at its place of business.
25        (3) A debtor that is an organization and has more than

 

 

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1    one place of business is located at its chief executive
2    office.
3    (c) Limitation of applicability of subsection (b).
4Subsection (b) applies only if a debtor's residence, place of
5business, or chief executive office, as applicable, is located
6in a jurisdiction whose law generally requires information
7concerning the existence of a nonpossessory security interest
8to be made generally available in a filing, recording, or
9registration system as a condition or result of the security
10interest's obtaining priority over the rights of a lien
11creditor with respect to the collateral. If subsection (b) does
12not apply, the debtor is located in the District of Columbia.
13    (d) Continuation of location: cessation of existence, etc.
14A person that ceases to exist, have a residence, or have a
15place of business continues to be located in the jurisdiction
16specified by subsections (b) and (c).
17    (e) Location of registered organization organized under
18State law. A registered organization that is organized under
19the law of a State is located in that State.
20    (f) Location of registered organization organized under
21federal law; bank branches and agencies. Except as otherwise
22provided in subsection (i), a registered organization that is
23organized under the law of the United States and a branch or
24agency of a bank that is not organized under the law of the
25United States or a State are located:
26        (1) in the State that the law of the United States

 

 

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1    designates, if the law designates a State of location;
2        (2) in the State that the registered organization,
3    branch, or agency designates, if the law of the United
4    States authorizes the registered organization, branch, or
5    agency to designate its State of location, including by
6    designating its main office, home office, or other
7    comparable office; or
8        (3) in the District of Columbia, if neither paragraph
9    (1) nor paragraph (2) applies.
10    (g) Continuation of location: change in status of
11registered organization. A registered organization continues
12to be located in the jurisdiction specified by subsection (e)
13or (f) notwithstanding:
14        (1) the suspension, revocation, forfeiture, or lapse
15    of the registered organization's status as such in its
16    jurisdiction of organization; or
17        (2) the dissolution, winding up, or cancellation of the
18    existence of the registered organization.
19    (h) Location of United States. The United States is located
20in the District of Columbia.
21    (i) Location of foreign bank branch or agency if licensed
22in only one State. A branch or agency of a bank that is not
23organized under the law of the United States or a State is
24located in the State in which the branch or agency is licensed,
25if all branches and agencies of the bank are licensed in only
26one State.

 

 

SB3764 Engrossed- 37 -LRB097 19386 JLS 64639 b

1    (j) Location of foreign air carrier. A foreign air carrier
2under the Federal Aviation Act of 1958, as amended, is located
3at the designated office of the agent upon which service of
4process may be made on behalf of the carrier.
5    (k) Section applies only to this Part. This Section applies
6only for purposes of this Part.
7(Source: P.A. 91-357, eff. 7-29-99; 91-893, eff. 7-1-01.)
 
8    (810 ILCS 5/9-311)  (from Ch. 26, par. 9-311)
9    Sec. 9-311. Perfection of security interests in property
10subject to certain statutes, regulations, and treaties.
11    (a) Security interest subject to other law. Except as
12otherwise provided in subsection (d), the filing of a financing
13statement is not necessary or effective to perfect a security
14interest in property subject to:
15        (1) a statute, regulation, or treaty of the United
16    States whose requirements for a security interest's
17    obtaining priority over the rights of a lien creditor with
18    respect to the property preempt Section 9-310(a);
19        (2) the Illinois Vehicle Code or the Boat Registration
20    and Safety Act; or
21        (3) a certificate-of-title statute of another
22    jurisdiction which provides for a security interest to be
23    indicated on a the certificate of title as a condition or
24    result of the security interest's obtaining priority over
25    the rights of a lien creditor with respect to the property.

 

 

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1    (b) Compliance with other law. Compliance with the
2requirements of a statute, regulation, or treaty described in
3subsection (a) for obtaining priority over the rights of a lien
4creditor is equivalent to the filing of a financing statement
5under this Article. Except as otherwise provided in subsection
6(d) and Sections 9-313 and 9-316(d) and (e) for goods covered
7by a certificate of title, a security interest in property
8subject to a statute, regulation, or treaty described in
9subsection (a) may be perfected only by compliance with those
10requirements, and a security interest so perfected remains
11perfected notwithstanding a change in the use or transfer of
12possession of the collateral.
13    (c) Duration and renewal of perfection. Except as otherwise
14provided in subsection (d) and Section 9-316(d) and (e),
15duration and renewal of perfection of a security interest
16perfected by compliance with the requirements prescribed by a
17statute, regulation, or treaty described in subsection (a) are
18governed by the statute, regulation, or treaty. In other
19respects, the security interest is subject to this Article.
20    (d) Inapplicability to certain inventory. During any
21period in which collateral subject to a statute specified in
22subsection (a)(2) is inventory held for sale or lease by a
23person or leased by that person as lessor and that person is in
24the business of selling or leasing goods of that kind, this
25Section does not apply to a security interest in that
26collateral created by that person as debtor.

 

 

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1(Source: P.A. 91-893, eff. 7-1-01.)
 
2    (810 ILCS 5/9-316)  (from Ch. 26, par. 9-316)
3    Sec. 9-316. Effect of Continued perfection of security
4interest following change in governing law.
5    (a) General rule: effect on perfection of change in
6governing law. A security interest perfected pursuant to the
7law of the jurisdiction designated in Section 9-301(1) or
89-305(c) remains perfected until the earliest of:
9        (1) the time perfection would have ceased under the law
10    of that jurisdiction;
11        (2) the expiration of four months after a change of the
12    debtor's location to another jurisdiction; or
13        (3) the expiration of one year after a transfer of
14    collateral to a person that thereby becomes a debtor and is
15    located in another jurisdiction.
16    (b) Security interest perfected or unperfected under law of
17new jurisdiction. If a security interest described in
18subsection (a) becomes perfected under the law of the other
19jurisdiction before the earliest time or event described in
20that subsection, it remains perfected thereafter. If the
21security interest does not become perfected under the law of
22the other jurisdiction before the earliest time or event, it
23becomes unperfected and is deemed never to have been perfected
24as against a purchaser of the collateral for value.
25    (c) Possessory security interest in collateral moved to new

 

 

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1jurisdiction. A possessory security interest in collateral,
2other than goods covered by a certificate of title and
3as-extracted collateral consisting of goods, remains
4continuously perfected if:
5        (1) the collateral is located in one jurisdiction and
6    subject to a security interest perfected under the law of
7    that jurisdiction;
8        (2) thereafter the collateral is brought into another
9    jurisdiction; and
10        (3) upon entry into the other jurisdiction, the
11    security interest is perfected under the law of the other
12    jurisdiction.
13    (d) Goods covered by certificate of title from this State.
14Except as otherwise provided in subsection (e), a security
15interest in goods covered by a certificate of title which is
16perfected by any method under the law of another jurisdiction
17when the goods become covered by a certificate of title from
18this State remains perfected until the security interest would
19have become unperfected under the law of the other jurisdiction
20had the goods not become so covered.
21    (e) When subsection (d) security interest becomes
22unperfected against purchasers. A security interest described
23in subsection (d) becomes unperfected as against a purchaser of
24the goods for value and is deemed never to have been perfected
25as against a purchaser of the goods for value if the applicable
26requirements for perfection under Section 9-311(b) or 9-313 are

 

 

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1not satisfied before the earlier of:
2        (1) the time the security interest would have become
3    unperfected under the law of the other jurisdiction had the
4    goods not become covered by a certificate of title from
5    this State; or
6        (2) the expiration of four months after the goods had
7    become so covered.
8    (f) Change in jurisdiction of bank, issuer, nominated
9person, securities intermediary, or commodity intermediary. A
10security interest in deposit accounts, letter-of-credit
11rights, or investment property which is perfected under the law
12of the bank's jurisdiction, the issuer's jurisdiction, a
13nominated person's jurisdiction, the securities intermediary's
14jurisdiction, or the commodity intermediary's jurisdiction, as
15applicable, remains perfected until the earlier of:
16        (1) the time the security interest would have become
17    unperfected under the law of that jurisdiction; or
18        (2) the expiration of four months after a change of the
19    applicable jurisdiction to another jurisdiction.
20    (g) Subsection (f) security interest perfected or
21unperfected under law of new jurisdiction. If a security
22interest described in subsection (f) becomes perfected under
23the law of the other jurisdiction before the earlier of the
24time or the end of the period described in that subsection, it
25remains perfected thereafter. If the security interest does not
26become perfected under the law of the other jurisdiction before

 

 

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1the earlier of that time or the end of that period, it becomes
2unperfected and is deemed never to have been perfected as
3against a purchaser of the collateral for value.
4    (h) Effect on filed financing statement of change in
5governing law. The following rules apply to collateral to which
6a security interest attaches within four months after the
7debtor changes its location to another jurisdiction:
8        (1) A financing statement filed before the change
9    pursuant to the law of the jurisdiction designated in
10    Section 9-301(1) or 9-305(c) is effective to perfect a
11    security interest in the collateral if the financing
12    statement would have been effective to perfect a security
13    interest in the collateral had the debtor not changed its
14    location.
15        (2) If a security interest perfected by a financing
16    statement that is effective under paragraph (1) becomes
17    perfected under the law of the other jurisdiction before
18    the earlier of the time the financing statement would have
19    become ineffective under the law of the jurisdiction
20    designated in Section 9-301(1) or 9-305(c) or the
21    expiration of the four-month period, it remains perfected
22    thereafter. If the security interest does not become
23    perfected under the law of the other jurisdiction before
24    the earlier time or event, it becomes unperfected and is
25    deemed never to have been perfected as against a purchaser
26    of the collateral for value.

 

 

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1    (i) Effect of change in governing law on financing
2statement filed against original debtor. If a financing
3statement naming an original debtor is filed pursuant to the
4law of the jurisdiction designated in Section 9-301(1) or
59-305(c) and the new debtor is located in another jurisdiction,
6the following rules apply:
7        (1) The financing statement is effective to perfect a
8    security interest in collateral acquired by the new debtor
9    before, and within four months after, the new debtor
10    becomes bound under Section 9-203(d), if the financing
11    statement would have been effective to perfect a security
12    interest in the collateral had the collateral been acquired
13    by the original debtor.
14        (2) A security interest perfected by the financing
15    statement and which becomes perfected under the law of the
16    other jurisdiction before the earlier of the time the
17    financing statement would have become ineffective under
18    the law of the jurisdiction designated in Section 9-301(1)
19    or 9-305(c) or the expiration of the four-month period
20    remains perfected thereafter. A security interest that is
21    perfected by the financing statement but which does not
22    become perfected under the law of the other jurisdiction
23    before the earlier time or event becomes unperfected and is
24    deemed never to have been perfected as against a purchaser
25    of the collateral for value.
26(Source: P.A. 91-893, eff. 7-1-01.)
 

 

 

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1    (810 ILCS 5/9-317)  (from Ch. 26, par. 9-317)
2    Sec. 9-317. Interests that take priority over or take free
3of security interest or agricultural lien.
4    (a) Conflicting security interests and rights of lien
5creditors. A security interest or agricultural lien is
6subordinate to the rights of:
7        (1) a person entitled to priority under Section 9-322;
8    and
9        (2) except as otherwise provided in subsection (e) or
10    (f), a person that becomes a lien creditor before the
11    earlier of the time:
12            (A) the security interest or agricultural lien is
13        perfected; or
14            (B) one of the conditions specified in Section
15        9-203(b)(3) is met and a financing statement covering
16        the collateral is filed.
17    (b) Buyers that receive delivery. Except as otherwise
18provided in subsection (e), a buyer, other than a secured
19party, of tangible chattel paper, tangible documents, goods,
20instruments, or a certificated security security certificate
21takes free of a security interest or agricultural lien if the
22buyer gives value and receives delivery of the collateral
23without knowledge of the security interest or agricultural lien
24and before it is perfected.
25    (c) Lessees that receive delivery. Except as otherwise

 

 

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1provided in subsection (e), a lessee of goods takes free of a
2security interest or agricultural lien if the lessee gives
3value and receives delivery of the collateral without knowledge
4of the security interest or agricultural lien and before it is
5perfected.
6    (d) Licensees and buyers of certain collateral. A licensee
7of a general intangible or a buyer, other than a secured party,
8of collateral accounts, electronic chattel paper, electronic
9documents, general intangibles, or investment property other
10than tangible chattel paper, tangible documents, goods,
11instruments, or a certificated security takes free of a
12security interest if the licensee or buyer gives value without
13knowledge of the security interest and before it is perfected.
14    (e) Purchase-money security interest. Except as otherwise
15provided in Sections 9-320 and 9-321, if a person files a
16financing statement with respect to a purchase-money security
17interest before or within 20 days after the debtor receives
18delivery of the collateral, the security interest takes
19priority over the rights of a buyer, lessee, or lien creditor
20which arise between the time the security interest attaches and
21the time of filing.
22    (f) Public deposits. An unperfected security interest
23shall take priority over the rights of a lien creditor if (i)
24the lien creditor is a trustee or receiver of a bank or acting
25in furtherance of its supervisory authority over such bank and
26(ii) a security interest is granted by the bank to secure a

 

 

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1deposit of public funds with the bank or a repurchase agreement
2with the bank pursuant to the Government Securities Act of
31986, as amended.
4(Source: P.A. 95-895, eff. 1-1-09.)
 
5    (810 ILCS 5/9-326)
6    Sec. 9-326. Priority of security interests created by new
7debtor.
8    (a) Subordination of security interest created by new
9debtor. Subject to subsection (b), a security interest that is
10created by a new debtor in collateral in which the new debtor
11has or acquires rights and is perfected solely by a filed
12financing statement that would be ineffective to perfect the
13security interest but for the application of Section
149-316(i)(1) or 9-508 is effective solely under Section 9-508 in
15collateral in which a new debtor has or acquires rights is
16subordinate to a security interest in the same collateral which
17is perfected other than by such a filed financing statement
18that is effective solely under Section 9-508.
19    (b) Priority under other provisions; multiple original
20debtors. The other provisions of this Part determine the
21priority among conflicting security interests in the same
22collateral perfected by filed financing statements described
23in subsection (a) that are effective solely under Section
249-508. However, if the security agreements to which a new
25debtor became bound as debtor were not entered into by the same

 

 

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1original debtor, the conflicting security interests rank
2according to priority in time of the new debtor's having become
3bound.
4(Source: P.A. 91-893, eff. 7-1-01.)
 
5    (810 ILCS 5/9-406)  (from Ch. 26, par. 9-406)
6    Sec. 9-406. Discharge of account debtor; notification of
7assignment; identification and proof of assignment;
8restrictions on assignment of accounts, chattel paper, payment
9intangibles, and promissory notes ineffective.
10    (a) Discharge of account debtor; effect of notification.
11Subject to subsections (b) through (i), an account debtor on an
12account, chattel paper, or a payment intangible may discharge
13its obligation by paying the assignor until, but not after, the
14account debtor receives a notification, authenticated by the
15assignor or the assignee, that the amount due or to become due
16has been assigned and that payment is to be made to the
17assignee. After receipt of the notification, the account debtor
18may discharge its obligation by paying the assignee and may not
19discharge the obligation by paying the assignor.
20    (b) When notification ineffective. Subject to subsection
21(h), notification is ineffective under subsection (a):
22        (1) if it does not reasonably identify the rights
23    assigned;
24        (2) to the extent that an agreement between an account
25    debtor and a seller of a payment intangible limits the

 

 

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1    account debtor's duty to pay a person other than the seller
2    and the limitation is effective under law other than this
3    Article; or
4        (3) at the option of an account debtor, if the
5    notification notifies the account debtor to make less than
6    the full amount of any installment or other periodic
7    payment to the assignee, even if:
8            (A) only a portion of the account, chattel paper,
9        or payment intangible has been assigned to that
10        assignee;
11            (B) a portion has been assigned to another
12        assignee; or
13            (C) the account debtor knows that the assignment to
14        that assignee is limited.
15    (c) Proof of assignment. Subject to subsection (h), if
16requested by the account debtor, an assignee shall seasonably
17furnish reasonable proof that the assignment has been made.
18Unless the assignee complies, the account debtor may discharge
19its obligation by paying the assignor, even if the account
20debtor has received a notification under subsection (a).
21    (d) Term restricting assignment generally ineffective.
22Except as otherwise provided in subsection (e) and Sections
232A-303 and 9-407, and subject to subsection (h), a term in an
24agreement between an account debtor and an assignor or in a
25promissory note is ineffective to the extent that it:
26        (1) prohibits, restricts, or requires the consent of

 

 

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1    the account debtor or person obligated on the promissory
2    note to the assignment or transfer of, or the creation,
3    attachment, perfection, or enforcement of a security
4    interest in, the account, chattel paper, payment
5    intangible, or promissory note; or
6        (2) provides that the assignment or transfer or the
7    creation, attachment, perfection, or enforcement of the
8    security interest may give rise to a default, breach, right
9    of recoupment, claim, defense, termination, right of
10    termination, or remedy under the account, chattel paper,
11    payment intangible, or promissory note.
12    (e) Inapplicability of subsection (d) to certain sales.
13Subsection (d) does not apply to the sale of a payment
14intangible or promissory note, other than a sale pursuant to a
15disposition under Section 9-610 or an acceptance of collateral
16under Section 9-620.
17    (f) Legal restrictions on assignment generally
18ineffective. Except as otherwise provided in Sections 2A-303
19and 9-407 and subject to subsections (h) and (i), a rule of
20law, statute, or regulation that prohibits, restricts, or
21requires the consent of a government, governmental body or
22official, or account debtor to the assignment or transfer of,
23or creation of a security interest in, an account or chattel
24paper is ineffective to the extent that the rule of law,
25statute, or regulation:
26        (1) prohibits, restricts, or requires the consent of

 

 

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1    the government, governmental body or official, or account
2    debtor to the assignment or transfer of, or the creation,
3    attachment, perfection, or enforcement of a security
4    interest in the account or chattel paper; or
5        (2) provides that the assignment or transfer or the
6    creation, attachment, perfection, or enforcement of the
7    security interest may give rise to a default, breach, right
8    of recoupment, claim, defense, termination, right of
9    termination, or remedy under the account or chattel paper.
10    (g) Subsection (b)(3) not waivable. Subject to subsection
11(h), an account debtor may not waive or vary its option under
12subsection (b)(3).
13    (h) Rule for individual under other law. This Section is
14subject to law other than this Article which establishes a
15different rule for an account debtor who is an individual and
16who incurred the obligation primarily for personal, family, or
17household purposes.
18    (i) Inapplicability to health-care-insurance receivable.
19This Section does not apply to an assignment of a
20health-care-insurance receivable.
21(Source: P.A. 91-893, eff. 7-1-01.)
 
22    (810 ILCS 5/9-408)  (from Ch. 26, par. 9-408)
23    Sec. 9-408. Restrictions on assignment of promissory
24notes, health-care-insurance receivables, and certain general
25intangibles ineffective.

 

 

SB3764 Engrossed- 51 -LRB097 19386 JLS 64639 b

1    (a) Term restricting assignment generally ineffective.
2Except as otherwise provided in subsection (b), a term in a
3promissory note or in an agreement between an account debtor
4and a debtor which relates to a health-care-insurance
5receivable or a general intangible, including a contract,
6permit, license, or franchise, and which term prohibits,
7restricts, or requires the consent of the person obligated on
8the promissory note or the account debtor to, the assignment or
9transfer of, or creation, attachment, or perfection of a
10security interest in, the promissory note,
11health-care-insurance receivable, or general intangible, is
12ineffective to the extent that the term:
13        (1) would impair the creation, attachment, or
14    perfection of a security interest; or
15        (2) provides that the assignment or transfer or the
16    creation, attachment, or perfection of the security
17    interest may give rise to a default, breach, right of
18    recoupment, claim, defense, termination, right of
19    termination, or remedy under the promissory note,
20    health-care-insurance receivable, or general intangible.
21    (b) Applicability of subsection (a) to sales of certain
22rights to payment. Subsection (a) applies to a security
23interest in a payment intangible or promissory note only if the
24security interest arises out of a sale of the payment
25intangible or promissory note, other than a sale pursuant to a
26disposition under Section 9-610 or an acceptance of collateral

 

 

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1under Section 9-620.
2    (c) Legal restrictions on assignment generally
3ineffective. A rule of law, statute, or regulation that
4prohibits, restricts, or requires the consent of a government,
5governmental body or official, person obligated on a promissory
6note, or account debtor to the assignment or transfer of, or
7creation of a security interest in, a promissory note,
8health-care-insurance receivable, or general intangible,
9including a contract, permit, license, or franchise between an
10account debtor and a debtor, is ineffective to the extent that
11the rule of law, statute, or regulation:
12        (1) would impair the creation, attachment, or
13    perfection of a security interest; or
14        (2) provides that the assignment or transfer or the
15    creation, attachment, or perfection of the security
16    interest may give rise to a default, breach, right of
17    recoupment, claim, defense, termination, right of
18    termination, or remedy under the promissory note,
19    health-care-insurance receivable, or general intangible.
20    (d) Limitation on ineffectiveness under subsections (a)
21and (c). To the extent that a term in a promissory note or in an
22agreement between an account debtor and a debtor which relates
23to a health-care-insurance receivable or general intangible or
24a rule of law, statute, or regulation described in subsection
25(c) would be effective under law other than this Article but is
26ineffective under subsection (a) or (c), the creation,

 

 

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1attachment, or perfection of a security interest in the
2promissory note, health-care-insurance receivable, or general
3intangible:
4        (1) is not enforceable against the person obligated on
5    the promissory note or the account debtor;
6        (2) does not impose a duty or obligation on the person
7    obligated on the promissory note or the account debtor;
8        (3) does not require the person obligated on the
9    promissory note or the account debtor to recognize the
10    security interest, pay or render performance to the secured
11    party, or accept payment or performance from the secured
12    party;
13        (4) does not entitle the secured party to use or assign
14    the debtor's rights under the promissory note,
15    health-care-insurance receivable, or general intangible,
16    including any related information or materials furnished
17    to the debtor in the transaction giving rise to the
18    promissory note, health-care-insurance receivable, or
19    general intangible;
20        (5) does not entitle the secured party to use, assign,
21    possess, or have access to any trade secrets or
22    confidential information of the person obligated on the
23    promissory note or the account debtor; and
24        (6) does not entitle the secured party to enforce the
25    security interest in the promissory note,
26    health-care-insurance receivable, or general intangible.

 

 

SB3764 Engrossed- 54 -LRB097 19386 JLS 64639 b

1(Source: P.A. 91-893, eff. 7-1-01.)
 
2    (810 ILCS 5/9-502)  (from Ch. 26, par. 9-502)
3    Sec. 9-502. Contents of financing statement; record of
4mortgage as financing statement; time of filing financing
5statement.
6    (a) Sufficiency of financing statement. Subject to
7subsection (b), a financing statement is sufficient only if it:
8        (1) provides the name of the debtor;
9        (2) provides the name of the secured party or a
10    representative of the secured party; and
11        (3) indicates the collateral covered by the financing
12    statement.
13    (b) Real-property-related financing statements. Except as
14otherwise provided in Section 9-501(b), to be sufficient, a
15financing statement that covers as-extracted collateral or
16timber to be cut, or which is filed as a fixture filing and
17covers goods that are or are to become fixtures, must satisfy
18subsection (a) and also:
19        (1) indicate that it covers this type of collateral;
20        (2) indicate that it is to be filed in the real
21    property records;
22        (3) provide a description of the real property to which
23    the collateral is related sufficient to give constructive
24    notice of a mortgage under the law of this State if the
25    description were contained in a record of the mortgage of

 

 

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1    the real property; and
2        (4) if the debtor does not have an interest of record
3    in the real property, provide the name of a record owner.
4    (c) Record of mortgage as financing statement. A record of
5a mortgage is effective, from the date of recording, as a
6financing statement filed as a fixture filing or as a financing
7statement covering as-extracted collateral or timber to be cut
8only if:
9        (1) the record indicates the goods or accounts that it
10    covers;
11        (2) the goods are or are to become fixtures related to
12    the real property described in the record or the collateral
13    is related to the real property described in the record and
14    is as-extracted collateral or timber to be cut;
15        (3) the record satisfies the requirements for a
16    financing statement in this Section, but:
17            (A) the record need not indicate other than an
18        indication that it is to be filed in the real property
19        records; and
20            (B) the record sufficiently provides the name of a
21        debtor who is an individual if it provides the
22        individual name of the debtor or the surname and first
23        personal name of the debtor, even if the debtor is an
24        individual to whom Section 9-503(a)(4) applies; and
25        (4) the record is recorded.
26    (d) Filing before security agreement or attachment. A

 

 

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1financing statement may be filed before a security agreement is
2made or a security interest otherwise attaches.
3(Source: P.A. 91-893, eff. 7-1-01.)
 
4    (810 ILCS 5/9-503)  (from Ch. 26, par. 9-503)
5    Sec. 9-503. Name of debtor and secured party.
6    (a) Sufficiency of debtor's name. A financing statement
7sufficiently provides the name of the debtor:
8        (1) except as otherwise provided in paragraph (3), if
9    the debtor is a registered organization or the collateral
10    is held in a trust that is a registered organization, only
11    if the financing statement provides the name that is stated
12    to be the registered organization's name of the debtor
13    indicated on the public organic record most recently filed
14    with or issued or enacted by of the registered
15    organization's debtor's jurisdiction of organization which
16    purports to state, amend, or restate the registered
17    organization's name shows the debtor to have been
18    organized;
19        (2) subject to subsection (f), if the collateral is
20    being administered by the personal representative of a
21    decedent debtor is a decedent's estate, only if the
22    financing statement provides, as the name of the debtor,
23    the name of the decedent and, in a separate part of the
24    financing statement, indicates that the collateral is
25    being administered by a personal representative debtor is

 

 

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1    an estate;
2        (3) if the collateral is held in a trust that is not a
3    registered organization debtor is a trust or a trustee
4    acting with respect to property held in trust, only if the
5    financing statement:
6            (A) provides, as the name of the debtor:
7                (i) if the organic record of the trust
8            specifies a name for the trust, the name specified;
9            or
10                (ii) if the organic record of the trust does
11            not specify a name for the trust, the name of the
12            settlor or testator the name specified for the
13            trust in its organic documents or, if no name is
14            specified, provides the name of the settlor and
15            additional information sufficient to distinguish
16            the debtor from other trusts having one or more of
17            the same settlors; and
18            (B) in a separate part of the financing statement:
19                (i) if the name is provided in accordance with
20            subparagraph (A)(i), indicates that the collateral
21            is held in a trust; or
22                (ii) if the name is provided in accordance with
23            subparagraph (A)(ii), provides additional
24            information sufficient to distinguish the trust
25            from other trusts having one or more of the same
26            settlors or the same testator and indicates that

 

 

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1            the collateral is held in a trust, unless the
2            additional information so indicates;
3        (4) subject to subsection (g), if the debtor is an
4    individual to whom this State has issued a driver's license
5    that has not expired, only if the financing statement
6    provides the name of the individual which is indicated on
7    the driver's license;
8        (5) if the debtor is an individual to whom paragraph
9    (4) does not apply, only if the financing statement
10    provides the individual name of the debtor or the surname
11    and first personal name of the debtor indicates, in the
12    debtor's name or otherwise, that the debtor is a trust or
13    is a trustee acting with respect to property held in trust;
14    and
15        (6) (4) in other cases:
16            (A) if the debtor has a name, only if the financing
17        statement it provides the individual or organizational
18        name of the debtor; and
19            (B) if the debtor does not have a name, only if it
20        provides the names of the partners, members,
21        associates, or other persons comprising the debtor, in
22        a manner that each name provided would be sufficient if
23        the person named were the debtor.
24    (b) Additional debtor-related information. A financing
25statement that provides the name of the debtor in accordance
26with subsection (a) is not rendered ineffective by the absence

 

 

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1of:
2        (1) a trade name or other name of the debtor; or
3        (2) unless required under subsection (a)(6)(B)
4    (a)(4)(B), names of partners, members, associates, or
5    other persons comprising the debtor.
6    (c) Debtor's trade name insufficient. A financing
7statement that provides only the debtor's trade name does not
8sufficiently provide the name of the debtor.
9    (d) Representative capacity. Failure to indicate the
10representative capacity of a secured party or representative of
11a secured party does not affect the sufficiency of a financing
12statement.
13    (e) Multiple debtors and secured parties. A financing
14statement may provide the name of more than one debtor and the
15name of more than one secured party.
16    (f) Name of decedent. The name of the decedent indicated on
17the order appointing the personal representative of the
18decedent issued by the court having jurisdiction over the
19collateral is sufficient as the "name of the decedent" under
20subsection (a)(2).
21    (g) Multiple driver's licenses. If this State has issued to
22an individual more than one driver's license of a kind
23described in subsection (a)(4), the one that was issued most
24recently is the one to which subsection (a)(4) refers.
25    (h) Definition. In this Section, the "name of the settlor
26or testator" means:

 

 

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1        (1) if the settlor is a registered organization, the
2    name that is stated to be the settlor's name on the public
3    organic record most recently filed with or issued or
4    enacted by the settlor's jurisdiction of organization
5    which purports to state, amend, or restate the settlor's
6    name; or
7        (2) in other cases, the name of the settlor or testator
8    indicated in the trust's organic record.
9(Source: P.A. 91-893, eff. 7-1-01.)
 
10    (810 ILCS 5/9-507)  (from Ch. 26, par. 9-507)
11    Sec. 9-507. Effect of certain events on effectiveness of
12financing statement.
13    (a) Disposition. A filed financing statement remains
14effective with respect to collateral that is sold, exchanged,
15leased, licensed, or otherwise disposed of and in which a
16security interest or agricultural lien continues, even if the
17secured party knows of or consents to the disposition.
18    (b) Information becoming seriously misleading. Except as
19otherwise provided in subsection (c) and Section 9-508, a
20financing statement is not rendered ineffective if, after the
21financing statement is filed, the information provided in the
22financing statement becomes seriously misleading under Section
239-506.
24    (c) Change in debtor's name. If the a debtor so changes its
25name that a filed financing statement provides for a debtor

 

 

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1becomes insufficient as the name of the debtor under Section
29-503(a) so that the financing statement becomes seriously
3misleading under Section 9-506:
4        (1) the financing statement is effective to perfect a
5    security interest in collateral acquired by the debtor
6    before, or within four months after, the filed financing
7    statement becomes seriously misleading change; and
8        (2) the financing statement is not effective to perfect
9    a security interest in collateral acquired by the debtor
10    more than four months after the filed financing statement
11    becomes seriously misleading change, unless an amendment
12    to the financing statement which renders the financing
13    statement not seriously misleading is filed within four
14    months after the filed financing statement becomes
15    seriously misleading change.
16(Source: P.A. 90-214, eff. 7-25-97; 91-893, eff. 7-1-01.)
 
17    (810 ILCS 5/9-515)
18    Sec. 9-515. Duration and effectiveness of financing
19statement; effect of lapsed financing statement.
20    (a) Five-year effectiveness. Except as otherwise provided
21in subsections (b), (e), (f), and (g), a filed financing
22statement is effective for a period of five years after the
23date of filing.
24    (b) Public-finance or manufactured-home transaction.
25Except as otherwise provided in subsections (e), (f), and (g),

 

 

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1an initial financing statement filed in connection with a
2public-finance transaction or manufactured-home transaction is
3effective for a period of 30 years after the date of filing if
4it indicates that it is filed in connection with a
5public-finance transaction or manufactured-home transaction.
6    (c) Lapse and continuation of financing statement. The
7effectiveness of a filed financing statement lapses on the
8expiration of the period of its effectiveness unless before the
9lapse a continuation statement is filed pursuant to subsection
10(d). Upon lapse, a financing statement ceases to be effective
11and any security interest or agricultural lien that was
12perfected by the financing statement becomes unperfected,
13unless the security interest is perfected otherwise. If the
14security interest or agricultural lien becomes unperfected
15upon lapse, it is deemed never to have been perfected as
16against a purchaser of the collateral for value.
17    (d) When continuation statement may be filed. A
18continuation statement may be filed only within six months
19before the expiration of the five-year period specified in
20subsection (a) or the 30-year period specified in subsection
21(b), whichever is applicable.
22    (e) Effect of filing continuation statement. Except as
23otherwise provided in Section 9-510, upon timely filing of a
24continuation statement, the effectiveness of the initial
25financing statement continues for a period of five years
26commencing on the day on which the financing statement would

 

 

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1have become ineffective in the absence of the filing. Upon the
2expiration of the five-year period, the financing statement
3lapses in the same manner as provided in subsection (c),
4unless, before the lapse, another continuation statement is
5filed pursuant to subsection (d). Succeeding continuation
6statements may be filed in the same manner to continue the
7effectiveness of the initial financing statement.
8    (f) Transmitting utility financing statement. If a debtor
9is a transmitting utility and a filed initial financing
10statement so indicates, the financing statement is effective
11until a termination statement is filed.
12    (g) Record of mortgage as financing statement. A record of
13a mortgage that is effective as a financing statement filed as
14a fixture filing under Section 9-502(c) remains effective as a
15financing statement filed as a fixture filing until the
16mortgage is released or satisfied of record or its
17effectiveness otherwise terminates as to the real property.
18(Source: P.A. 91-893, eff. 7-1-01.)
 
19    (810 ILCS 5/9-516)
20    Sec. 9-516. What constitutes filing; effectiveness of
21filing.
22    (a) What constitutes filing. Except as otherwise provided
23in subsection (b), communication of a record to a filing office
24and tender of the filing fee or acceptance of the record by the
25filing office constitutes filing.

 

 

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1    (b) Refusal to accept record; filing does not occur. Filing
2does not occur with respect to a record that a filing office
3refuses to accept because:
4        (1) the record is not communicated by a method or
5    medium of communication authorized by the filing office;
6        (2) an amount equal to or greater than the applicable
7    filing fee is not tendered;
8        (3) the filing office is unable to index the record
9    because:
10            (A) in the case of an initial financing statement,
11        the record does not provide a name for the debtor;
12            (B) in the case of an amendment or information
13        correction statement, the record:
14                (i) does not identify the initial financing
15            statement as required by Section 9-512 or 9-518, as
16            applicable; or
17                (ii) identifies an initial financing statement
18            whose effectiveness has lapsed under Section
19            9-515;
20            (C) in the case of an initial financing statement
21        that provides the name of a debtor identified as an
22        individual or an amendment that provides a name of a
23        debtor identified as an individual which was not
24        previously provided in the financing statement to
25        which the record relates, the record does not identify
26        the debtor's surname last name;

 

 

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1            (D) in the case of a record filed or recorded in
2        the filing office described in Section 9-501(a)(1),
3        the record does not provide a sufficient description of
4        the real property to which it relates; or
5            (E) in the case of a record submitted to the filing
6        office described in Section 9-501(b), the debtor does
7        not meet the definition of a transmitting utility as
8        described in Section 9-102(a)(80);
9        (3.5) in the case of an initial financing statement or
10    an amendment, if the filing office believes in good faith
11    that a document submitted for filing is being filed for the
12    purpose of defrauding any person or harassing any person in
13    the performance of duties as a public servant;
14        (4) in the case of an initial financing statement or an
15    amendment that adds a secured party of record, the record
16    does not provide a name and mailing address for the secured
17    party of record;
18        (5) in the case of an initial financing statement or an
19    amendment that provides a name of a debtor which was not
20    previously provided in the financing statement to which the
21    amendment relates, the record does not:
22            (A) provide a mailing address for the debtor; or
23            (B) indicate whether the name provided as the name
24        of the debtor is the name of an individual or an
25        organization; or
26            (C) if the financing statement indicates that the

 

 

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1        debtor is an organization, provide:
2                (i) a type of organization for the debtor;
3                (ii) a jurisdiction of organization for the
4            debtor; or
5                (iii) an organizational identification number
6            for the debtor or indicate that the debtor has
7            none;
8        (6) in the case of an assignment reflected in an
9    initial financing statement under Section 9-514(a) or an
10    amendment filed under Section 9-514(b), the record does not
11    provide a name and mailing address for the assignee; or
12        (7) in the case of a continuation statement, the record
13    is not filed within the six-month period prescribed by
14    Section 9-515(d).
15    (c) Rules applicable to subsection (b). For purposes of
16subsection (b):
17        (1) a record does not provide information if the filing
18    office is unable to read or decipher the information; and
19        (2) a record that does not indicate that it is an
20    amendment or identify an initial financing statement to
21    which it relates, as required by Section 9-512, 9-514, or
22    9-518, is an initial financing statement.
23    (d) Refusal to accept record; record effective as filed
24record. A record that is communicated to the filing office with
25tender of the filing fee, but which the filing office refuses
26to accept for a reason other than one set forth in subsection

 

 

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1(b), is effective as a filed record except as against a
2purchaser of the collateral which gives value in reasonable
3reliance upon the absence of the record from the files.
4    (e) The Secretary of State may refuse to accept a record
5for filing under subdivision (b)(3)(E) or (b)(3.5) only if the
6refusal is approved by the Department of Business Services of
7the Secretary of State and the General Counsel to the Secretary
8of State.
9(Source: P.A. 95-446, eff. 1-1-08.)
 
10    (810 ILCS 5/9-518)
11    Sec. 9-518. Claim concerning inaccurate or wrongfully
12filed record.
13    (a) Statement with respect to record indexed under a
14person's name Correction statement. A person may file in the
15filing office an information a correction statement with
16respect to a record indexed there under the person's name if
17the person believes that the record is inaccurate or was
18wrongfully filed.
19    (b) Contents Sufficiency of correction statement under
20subsection (a). An information A correction statement under
21subsection (a) must:
22        (1) identify the record to which it relates by: (A) the
23    file number assigned to the initial financing statement to
24    which the record relates; and
25            (B) if the correction statement relates to a record

 

 

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1        filed or recorded in a filing office described in
2        Section 9-501(a)(1), the date and time that the initial
3        financing statement was filed and the information
4        specified in Section 9-502(b);
5        (2) indicate that it is an information a correction
6    statement; and
7        (3) provide the basis for the person's belief that the
8    record is inaccurate and indicate the manner in which the
9    person believes the record should be amended to cure any
10    inaccuracy or provide the basis for the person's belief
11    that the record was wrongfully filed.
12    (c) Statement by secured party of record. A person may file
13in the filing office an information statement with respect to a
14record filed there if the person is a secured party of record
15with respect to the financing statement to which the record
16relates and believes that the person that filed the record was
17not entitled to do so under Section 9-509(d).
18    (d) Contents of statement under subsection (c). An
19information statement under subsection (c) must:
20        (1) identify the record to which it relates by the file
21    number assigned to the initial financing statement to which
22    the record relates;
23        (2) indicate that it is an information statement; and
24        (3) provide the basis for the person's belief that the
25    person that filed the record was not entitled to do so
26    under Section 9-509(d).

 

 

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1    (e) (c) Record not affected by information correction
2statement. The filing of an information a correction statement
3does not affect the effectiveness of an initial financing
4statement or other filed record.
5(Source: P.A. 91-893, eff. 7-1-01.)
 
6    (810 ILCS 5/9-521)
7    Sec. 9-521. Uniform form of written financing statement and
8amendment.
9    (a) Initial financing statement form. A filing office that
10accepts written records may not refuse to accept a written
11initial financing statement in the form and format set forth in
12the final official text of the 2010 amendments 1999 revisions
13to Article 9 of the Uniform Commercial Code promulgated by the
14American Law Institute and the National Conference of
15Commissioners on Uniform State Laws, except for a reason set
16forth in Section 9-516(b).
17    (b) Amendment form. A filing office that accepts written
18records may not refuse to accept a written record in the form
19and format set forth as Form UCC3 and Form UCC3Ad in the final
20official text of the 2010 amendments 1999 revisions to Article
219 of the Uniform Commercial Code promulgated by the American
22Law Institute and the National Conference of Commissioners on
23Uniform State Laws, except for a reason set forth in Section
249-516(b).
25(Source: P.A. 91-893, eff. 7-1-01.)
 

 

 

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1    (810 ILCS 5/9-607)
2    Sec. 9-607. Collection and enforcement by secured party.
3    (a) Collection and enforcement generally. If so agreed, and
4in any event after default, a secured party:
5        (1) may notify an account debtor or other person
6    obligated on collateral to make payment or otherwise render
7    performance to or for the benefit of the secured party;
8        (2) may take any proceeds to which the secured party is
9    entitled under Section 9-315;
10        (3) may enforce the obligations of an account debtor or
11    other person obligated on collateral and exercise the
12    rights of the debtor with respect to the obligation of the
13    account debtor or other person obligated on collateral to
14    make payment or otherwise render performance to the debtor,
15    and with respect to any property that secures the
16    obligations of the account debtor or other person obligated
17    on the collateral;
18        (4) if it holds a security interest in a deposit
19    account perfected by control under Section 9-104(a)(1),
20    may apply the balance of the deposit account to the
21    obligation secured by the deposit account; and
22        (5) if it holds a security interest in a deposit
23    account perfected by control under Section 9-104(a)(2) or
24    (3), may instruct the bank to pay the balance of the
25    deposit account to or for the benefit of the secured party.

 

 

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1    (b) Nonjudicial enforcement of mortgage. If necessary to
2enable a secured party to exercise under subsection (a)(3) the
3right of a debtor to enforce a mortgage nonjudicially, the
4secured party may record in the office in which a record of the
5mortgage is recorded:
6        (1) a copy of the security agreement that creates or
7    provides for a security interest in the obligation secured
8    by the mortgage; and
9        (2) the secured party's sworn affidavit in recordable
10    form stating that:
11            (A) a default has occurred with respect to the
12        obligation secured by the mortgage; and
13            (B) the secured party is entitled to enforce the
14        mortgage nonjudicially.
15    (c) Commercially reasonable collection and enforcement. A
16secured party shall proceed in a commercially reasonable manner
17if the secured party:
18        (1) undertakes to collect from or enforce an obligation
19    of an account debtor or other person obligated on
20    collateral; and
21        (2) is entitled to charge back uncollected collateral
22    or otherwise to full or limited recourse against the debtor
23    or a secondary obligor.
24    (d) Expenses of collection and enforcement. A secured party
25may deduct from the collections made pursuant to subsection (c)
26reasonable expenses of collection and enforcement, including

 

 

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1reasonable attorney's fees and legal expenses incurred by the
2secured party.
3    (e) Duties to secured party not affected. This Section does
4not determine whether an account debtor, bank, or other person
5obligated on collateral owes a duty to a secured party.
6(Source: P.A. 91-893, eff. 7-1-01.)
 
7    (810 ILCS 5/9-625)
8    Sec. 9-625. Remedies for secured party's failure to comply
9with Article.
10    (a) Judicial orders concerning noncompliance. If it is
11established that a secured party is not proceeding in
12accordance with this Article, a court may order or restrain
13collection, enforcement, or disposition of collateral on
14appropriate terms and conditions.
15    (b) Damages for noncompliance. Subject to subsections (c),
16(d), and (f), a person is liable for damages in the amount of
17any loss caused by a failure to comply with this Article. Loss
18caused by a failure to comply with a request under Section
199-210 may include loss resulting from the debtor's inability to
20obtain, or increased costs of, alternative financing.
21    (c) Persons entitled to recover damages; statutory damages
22if collateral is consumer goods in consumer-goods transaction.
23Except as otherwise provided in Section 9-628:
24        (1) a person that, at the time of the failure, was a
25    debtor, was an obligor, or held a security interest in or

 

 

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1    other lien on the collateral may recover in an individual
2    action damages under subsection (b) for its loss; and
3        (2) if the collateral is consumer goods, a person that
4    was a debtor or a secondary obligor at the time a secured
5    party failed to comply with this Part may recover in an
6    individual action for that failure in any event an amount
7    not less than the credit service charge plus 10 percent of
8    the principal amount of the obligation or the time-price
9    differential plus 10 percent of the cash price.
10    (d) Recovery when deficiency eliminated or reduced. A
11debtor whose deficiency is eliminated under Section 9-626 may
12recover damages for the loss of any surplus. However, a debtor
13or secondary obligor whose deficiency is eliminated or reduced
14under Section 9-626 may not otherwise recover under subsection
15(b) for noncompliance with the provisions of this Part relating
16to collection, enforcement, disposition, or acceptance.
17    (e) Statutory damages: noncompliance with specified
18provisions. In addition to any damages recoverable under
19subsection (b), the debtor, consumer obligor, or person named
20as a debtor in a filed record, as applicable, may recover in an
21individual action $500 for each instance that a person:
22        (1) fails to comply with Section 9-208;
23        (2) fails to comply with Section 9-209;
24        (3) files a record that the person is not entitled to
25    file under Section 9-509(a); or
26        (4) fails to cause the secured party of record to file

 

 

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1    or send a termination statement as required by Section
2    9-513(a) or (c).
3    (f) Statutory damages: noncompliance with Section 9-210. A
4debtor or consumer obligor may recover damages under subsection
5(b) and, in addition, may in an individual action recover $500
6in each case from a person that, without reasonable cause,
7fails to comply with a request under Section 9-210. A recipient
8of a request under Section 9-210 which never claimed an
9interest in the collateral or obligations that are the subject
10of a request under that Section has a reasonable excuse for
11failure to comply with the request within the meaning of this
12subsection.
13    (g) Limitation of security interest: noncompliance with
14Section 9-210. If a secured party fails to comply with a
15request regarding a list of collateral or a statement of
16account under Section 9-210, the secured party may claim a
17security interest only as shown in the statement included in
18the request as against a person that is reasonably misled by
19the failure.
20(Source: P.A. 91-893, eff. 7-1-01.)
 
21    (810 ILCS 5/Art. 9 Pt. 8 heading new)
22
PART 8. TRANSITION PROVISIONS FOR 2010 AMENDMENTS

 
23    (810 ILCS 5/9-801 new)
24    Sec. 9-801. Effective date. (See Section 99 of the Public

 

 

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1Act adding this Section to this Act.)
 
2    (810 ILCS 5/9-802 new)
3    Sec. 9-802. Savings clause.
4    (a) Pre-effective-date transactions or liens. Except as
5otherwise provided in this Part, this Act applies to a
6transaction or lien within its scope, even if the transaction
7or lien was entered into or created before the effective date
8of this amendatory Act of the 97th General Assembly.
9    (b) Pre-effective-date proceedings. This amendatory Act of
10the 97th General Assembly does not affect an action, case, or
11proceeding commenced before the effective date of this
12amendatory Act of the 97th General Assembly.
 
13    (810 ILCS 5/9-803 new)
14    Sec. 9-803. Security interest perfected before effective
15date.
16    (a) Continuing perfection: perfection requirements
17satisfied. A security interest that is a perfected security
18interest immediately before the effective date of this
19amendatory Act of the 97th General Assembly is a perfected
20security interest under Article 9 as amended by this amendatory
21Act of the 97th General Assembly if, on the effective date of
22this amendatory Act of the 97th General Assembly, the
23applicable requirements for attachment and perfection under
24Article 9 as amended by this amendatory Act of the 97th General

 

 

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1Assembly are satisfied without further action.
2    (b) Continuing perfection: perfection requirements not
3satisfied. Except as otherwise provided in Section 9-805, if,
4immediately before the effective date of this amendatory Act of
5the 97th General Assembly, a security interest is a perfected
6security interest, but the applicable requirements for
7perfection under Article 9 as amended by this amendatory Act of
8the 97th General Assembly are not satisfied when this
9amendatory Act of the 97th General Assembly takes effect, the
10security interest remains perfected thereafter only if the
11applicable requirements for perfection under Article 9 as
12amended by this amendatory Act of the 97th General Assembly are
13satisfied within one year after the effective date of this
14amendatory Act of the 97th General Assembly.
 
15    (810 ILCS 5/9-804 new)
16    Sec. 9-804. Security interest unperfected before the
17effective date of this amendatory Act of the 97th General
18Assembly. A security interest that is an unperfected security
19interest immediately before the effective date of this
20amendatory Act of the 97th General Assembly becomes a perfected
21security interest:
22        (1) without further action, when this amendatory Act of
23    the 97th General Assembly takes effect if the applicable
24    requirements for perfection under Article 9 as amended by
25    this amendatory Act of the 97th General Assembly are

 

 

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1    satisfied before or at that time; or
2        (2) when the applicable requirements for perfection
3    are satisfied if the requirements are satisfied after that
4    time.
 
5    (810 ILCS 5/9-805 new)
6    Sec. 9-805. Effectiveness of action taken before the
7effective date of this amendatory Act of the 97th General
8Assembly.
9    (a) Pre-effective-date filing effective. The filing of a
10financing statement before the effective date of this
11amendatory Act of the 97th General Assembly is effective to
12perfect a security interest to the extent the filing would
13satisfy the applicable requirements for perfection under
14Article 9 as amended by this amendatory Act of the 97th General
15Assembly.
16    (b) When pre-effective-date filing becomes ineffective.
17This amendatory Act of the 97th General Assembly does not
18render ineffective an effective financing statement that,
19before the effective date of this amendatory Act of the 97th
20General Assembly, is filed and satisfies the applicable
21requirements for perfection under the law of the jurisdiction
22governing perfection as provided in Article 9 as it existed
23before the effective date of this amendatory Act of the 97th
24General Assembly. However, except as otherwise provided in
25subsections (c) and (d) and Section 9-806, the financing

 

 

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1statement ceases to be effective:
2        (1) if the financing statement is filed in this State,
3    at the time the financing statement would have ceased to be
4    effective had this amendatory Act of the 97th General
5    Assembly not taken effect; or
6        (2) if the financing statement is filed in another
7    jurisdiction, at the earlier of:
8            (A) the time the financing statement would have
9        ceased to be effective under the law of that
10        jurisdiction; or
11            (B) June 30, 2018.
12    (c) Continuation statement. The filing of a continuation
13statement after the effective date of this amendatory Act of
14the 97th General Assembly does not continue the effectiveness
15of a financing statement filed before the effective date of
16this amendatory Act of the 97th General Assembly. However, upon
17the timely filing of a continuation statement after the
18effective date of this amendatory Act of the 97th General
19Assembly and in accordance with the law of the jurisdiction
20governing perfection as provided in Article 9, the
21effectiveness of a financing statement filed in the same office
22in that jurisdiction before the effective date of this
23amendatory Act of the 97th General Assembly continues for the
24period provided by the law of that jurisdiction.
25    (d) Application of subsection (b)(2)(B) to transmitting
26utility financing statement. Subsection (b)(2)(B) applies to a

 

 

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1financing statement that, before the effective date of this
2amendatory Act of the 97th General Assembly, is filed against a
3transmitting utility and satisfies the applicable requirements
4for perfection under the law of the jurisdiction governing
5perfection as provided in Article 9 as it existed before the
6effective date of this amendatory Act of the 97th General
7Assembly, only to the extent that Article 9 as amended by this
8amendatory Act of the 97th General Assembly provides that the
9law of a jurisdiction other than the jurisdiction in which the
10financing statement is filed governs perfection of a security
11interest in collateral covered by the financing statement.
12    (e) Application of Part 5. A financing statement that
13includes a financing statement filed before the effective date
14of this amendatory Act of the 97th General Assembly and a
15continuation statement filed after the effective date of this
16amendatory Act of the 97th General Assembly is effective only
17to the extent that it satisfies the requirements of Part 5 as
18amended by this amendatory Act of the 97th General Assembly for
19an initial financing statement. A financing statement that
20indicates that the debtor is a decedent's estate indicates that
21the collateral is being administered by a personal
22representative within the meaning of Section 9-503(a)(2) as
23amended by this amendatory Act of the 97th General Assembly. A
24financing statement that indicates that the debtor is a trust
25or is a trustee acting with respect to property held in trust
26indicates that the collateral is held in a trust within the

 

 

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1meaning of Section 9-503(a)(3) as amended by this amendatory
2Act of the 97th General Assembly.
 
3    (810 ILCS 5/9-806 new)
4    Sec. 9-806. When initial financing statement suffices to
5continue effectiveness of financing statement.
6    (a) Initial financing statement in lieu of continuation
7statement. The filing of an initial financing statement in the
8office specified in Section 9-501 continues the effectiveness
9of a financing statement filed before the effective date of
10this amendatory Act of the 97th General Assembly if:
11        (1) the filing of an initial financing statement in
12    that office would be effective to perfect a security
13    interest under Article 9 as amended by this amendatory Act
14    of the 97th General Assembly;
15        (2) the pre-effective-date financing statement was
16    filed in an office in another State; and
17        (3) the initial financing statement satisfies
18    subsection (c).
19    (b) Period of continued effectiveness. The filing of an
20initial financing statement under subsection (a) continues the
21effectiveness of the pre-effective-date financing statement:
22        (1) if the initial financing statement is filed before
23    the effective date of this amendatory Act of the 97th
24    General Assembly, for the period provided in Section 9-515
25    as it existed before the effective date of this amendatory

 

 

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1    Act of the 97th General Assembly with respect to an initial
2    financing statement; and
3        (2) if the initial financing statement is filed after
4    the effective date of this amendatory Act of the 97th
5    General Assembly, for the period provided in Section 9-515
6    as amended by this amendatory Act of the 97th General
7    Assembly with respect to an initial financing statement.
8    (c) Requirements for initial financing statement under
9subsection (a). To be effective for purposes of subsection (a),
10an initial financing statement must:
11        (1) satisfy the requirements of Part 5 as amended by
12    this amendatory Act of the 97th General Assembly for an
13    initial financing statement;
14        (2) identify the pre-effective-date financing
15    statement by indicating the office in which the financing
16    statement was filed and providing the dates of filing and
17    file numbers, if any, of the financing statement and of the
18    most recent continuation statement filed with respect to
19    the financing statement; and
20        (3) indicate that the pre-effective-date financing
21    statement remains effective.
 
22    (810 ILCS 5/9-807 new)
23    Sec. 9-807. Amendment of pre-effective-date financing
24statement.
25    (a) "Pre-effective-date financing statement". In this

 

 

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1Section, "pre-effective-date financing statement" means a
2financing statement filed before the effective date of this
3amendatory Act of the 97th General Assembly.
4    (b) Applicable law. After this amendatory Act of the 97th
5General Assembly takes effect, a person may add or delete
6collateral covered by, continue or terminate the effectiveness
7of, or otherwise amend the information provided in, a
8pre-effective-date financing statement only in accordance with
9the law of the jurisdiction governing perfection as provided in
10Article 9 as amended by this amendatory Act of the 97th General
11Assembly. However, the effectiveness of a pre-effective-date
12financing statement also may be terminated in accordance with
13the law of the jurisdiction in which the financing statement is
14filed.
15    (c) Method of amending: general rule. Except as otherwise
16provided in subsection (d), if the law of this State governs
17perfection of a security interest, the information in a
18pre-effective-date financing statement may be amended after
19the effective date of this amendatory Act of the 97th General
20Assembly only if:
21        (1) the pre-effective-date financing statement and an
22    amendment are filed in the office specified in Section
23    9-501;
24        (2) an amendment is filed in the office specified in
25    Section 9-501 concurrently with, or after the filing in
26    that office of, an initial financing statement that

 

 

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1    satisfies Section 9-806(c); or
2        (3) an initial financing statement that provides the
3    information as amended and satisfies Section 9-806(c) is
4    filed in the office specified in Section 9-501.
5    (d) Method of amending: continuation. If the law of this
6State governs perfection of a security interest, the
7effectiveness of a pre-effective-date financing statement may
8be continued only under Section 9-805(c) and (e) or 9-806.
9    (e) Method of amending: additional termination rule.
10Whether or not the law of this State governs perfection of a
11security interest, the effectiveness of a pre-effective-date
12financing statement filed in this State may be terminated after
13the effective date of this amendatory Act of the 97th General
14Assembly by filing a termination statement in the office in
15which the pre-effective-date financing statement is filed,
16unless an initial financing statement that satisfies Section
179-806(c) has been filed in the office specified by the law of
18the jurisdiction governing perfection as provided in Article 9
19as amended by this amendatory Act of the 97th General Assembly
20as the office in which to file a financing statement.
 
21    (810 ILCS 5/9-808 new)
22    Sec. 9-808. Person entitled to file initial financing
23statement or continuation statement. A person may file an
24initial financing statement or a continuation statement under
25this part if:

 

 

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1        (1) the secured party of record authorizes the filing;
2    and
3        (2) the filing is necessary under this Part:
4            (A) to continue the effectiveness of a financing
5        statement filed before the effective date of this
6        amendatory Act of the 97th General Assembly; or
7            (B) to perfect or continue the perfection of a
8        security interest.
 
9    (810 ILCS 5/9-809 new)
10    Sec. 9-809. Priority. This Act determines the priority of
11conflicting claims to collateral. However, if the relative
12priorities of the claims were established before the effective
13date of this amendatory Act of the 97th General Assembly,
14Article 9 as it existed before the effective date of this
15amendatory Act of the 97th General Assembly determines
16priority.
 
17    Section 99. Effective date. This Act takes effect July 1,
182013.