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BUS 393 (75)
Lecture 11

Bus 393 - Lecture 11

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Simon Fraser University
Business Administration
BUS 393
Colin Hawes

BUS 393 November 26 2010Lecture 12 Priority of CreditorsColin Hawes PersonalPersonal Property Security Act Deals with using personal property as security Property 608Secured Creditor A creditor who has priority over other creditors when debtor defaults Must register secured claim Personal Property Chattels and Choses in Action Chattels Tangible movable things Choses in Action Intangible rights with legally enforceable claims Pledge An item that a creditor takes hold of until debtor repays loan if he defaults then creditor cansell pledge TraditionalConditional Sale Seller retains title of item until last payment by buyer Loans 609Is protected by the sale of goods act Chattel Mortgage Bank lends to debtor and debtor puts up personal property as collateral bankhas title of this property until the last payment is made but property is in debtors hands Assignment of Accounts Receivable Businesses have money owed to them by services they canuse the owed money accounts receivable as security if business defaults bank can intercept funds Lease A secured arrangement whereby possession of goods goes to the lessee while the title to thegoods remains with the lessor Operating Lease Goods are rented to lessee then returned to the lessor Lease to Purchase Title of good does to lessee at the end of lease period Creating a 1 Parties must enter into the contractual agreement Secured a Must be under the PPSA terms Relationship 2 The secured interest must attach to the collateral that has been identified to provide security 612 a The collateral only attaches when the other party fulfills his part ie bank lending moneymust have money for debtor in order to attach debtors collateral Attachment An object is attached meaning that if debtor defaults creditor can claim object3 The secured interest must be perfecteda Can be done through registration but must be specific in many information Usually forgoods that the debtor still needs to useb Perfection by possession creditor takes the physical good must be originals not photocopiesUsually for goods that the debtor does not need in daily life Perfection Protection of a secured creditors claim either by registering the securedobligation or by taking possession of the collateral Priority ofFirst party to perfect usually prevails SecuredException Purchase Money Security Interest A security interest which will prevail over a general Creditors 613 security agreement covering all of a merchants assets if it is registered within the specified timeperiod Innocent buyer in normal course of business are not bound by perfection terms Rights andUpon default creditor can take possession and sell collateral Remedies UponCreditor hires a bailiff who seizes goods but must not use force when seizing property Default 614 Can apply for court order if access to premises is denied Creditor must take reasonable care of goods in possession Before a sale of the collateral can take place a right to redeem must be notified to the other party Any deficiencies after the sale of collateral the creditor loses because he chose to seize goods Only when consumer goods are involved Debtor is entitled to surplus if any from the sale
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