Digital Collateral in Bankruptcy: Control, Perfection, and Priority Under UCC Article 12

This CLE webinar will discuss what bankruptcy attorneys need to know about Article 12 of the Uniform Commercial Code (UCC) and related amendments to UCC Article 9 to prepare for transactions with existing and new digital assets. The panel will discuss virtual currencies, non-fungible tokens, and other digital assets as well as the potential effects of the changes on traditional financings commonly encountered by bankruptcy courts, including accounts and payment intangibles. The panel will also discuss ownership, perfection, and priority challenges that may be expected.

Parties transacting business in and collateralizing obligations with digital assets or electronic records must be able to enforce their rights and to protect themselves from adverse claims of third parties, especially in bankruptcy. Despite a few decisions, much uncertainty exists about who owns crypto assets at a crypto exchange if a bankruptcy ensues.

UCC Article 12 defines a new category of intangible property--"controllable electronic records" (CER) and sets forth what rights are associated with CERs, how they are transferred, how security interests in them are perfected, and many other aspects of priority disputes.

Because Article 12 is part of the entire UCC, it affects and is affected by many other interrelated UCC amendments and provisions, especially Article 9. Counsel cannot assume that these changes do not affect legacy lending issues. For example, parties may be forced to reevaluate whether certain types of traditional accounts and payment intangibles would now be "electronic" and whether they are capable of being "controlled" such that Article 12 would now offer the controlling rules.

Listen as this panel of renowned attorneys discusses what bankruptcy attorneys need to know about proposed Article 12 of the UCC, the proposed amendments to Article 9, and other UCC amendments.