DON'T LET YOUR UNSECURED CREDITOR CLIENTS BE INSECURE WHEN COMPETING WITH SECURED PARTIES

In most jurisdictions, the Secured Party, a financial institution/bank needs to proceed to Court and secure an Order recognizing its perfected lien and permitting the Bank to take possession, and (a) liquidate the assets or (b) allow debtor's management to "temporarily" operate the business in an orderly liquidation, i.e., complete work-in-progress and fill and deliver on existing purchase orders, to maximize liquidation proceeds. [...]under such a "Temporary Operating Orderly Liquidation" scenario, the Bank under UCC §9-207(a) is charged with a heightened Duty of Care when it is in actual possession and control, the bank actually "steps into the debtor's shoes", as a "quasisuccessor" and; becomes exposed to "new" third party claims, such as (i) new debts; (ii) new tort claims, and; (iii) employee claims. To avoid these exposures, some Secured Parties will seek Court authorization and/or supervision, to allow foreclose and/or authorization to allow debtor's management to form a new entity and purchase all the secured assets under a new Security Agreement and UCC Financing Statement. Here the Secured Party and Debtor and an unofficial unsecured creditors committee may negotiate a dividend with Court approval, i.e., a "common law bankruptcy". [...]the Platform pays the Manufacturer, it is not entitled to its residual portion of the "trust monies" and the Consumer does not secure Good Title nor Product Warranties.