Legislature(1999 - 2000)
04/17/2000 09:30 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CS FOR HOUSE BILL NO. 239(FIN)
"An Act relating to the Uniform Commercial Code;
relating to secured transactions; amending Rule 79,
Alaska Rules of Civil Procedure; and providing for an
effective date."
Co-Chair Torgerson reported that objections had been raised
about the bill from the State Bond Counsel.
REPRESENTATIVE LISA MURKOWSKI explained that trillions of
dollars of commercial and consumer credit are granted each
year in secured transactions under Article 9 of the Uniform
Commercial Code (UCC). UCC Article 9-Secured Transactions
provide a statutory framework that governs transactions in
which a creditor takes a security interest in specific
property of a debtor, allowing the creditor to take the
property in the event the debtor defaults on the debt.
Article 9 of the UCC has been adopted in every state and
was last revised in 1972. Major revisions to Article 9 by
the Uniform Law Commissioners were completed in 1998. The
st
revisions will bring Article 9 into the 21 Century.
Representative Murkowski outlined the reasons that the
revised Article 9 should be adopted:
· Technology
· Volume
· New Collateral
· Certainty of Perfection
· New Liens
· Clarification of Rules
· Simplified Filing
· Consumer Impact
· Commitment to Uniformity
Co-Chair Torgerson referenced Page 121, Lines 18-21, the
"retroactivity clause" and asked what that would do.
Representative Murkowski explained that was a reference to
a complicated flow chart. It refers to an existing
security interest and does not mean that anyone would need
to refile.
STEVEN WEISE, (Testified via Teleconfernce), ABA Advisor to
Article 9, Involved in drafting Revised Article 9, Heller
Ehrman White & McAuliffe, Los Angeles, California, added
that in the uniform version, there was another section that
deals more directly with the issue, Section 705(c). That
section clarifies that if a person filed under the current
Article 9, the filing would remain valid and that person
would not be at risk.
Co-Chair Torgerson questioned why that section had been
included in the bill.
Mr. Weise replied that the bill needs to address the old
and new Article 9 and how to go about guaranteeing that
there are not misunderstandings regarding the old financing
statements.
Co-Chair Torgerson argued that section does not indicate
that concern.
Mr. Weise replied that there is another section which
identifies the security issues perfected under current
Article 9. He suggested that would be one of the
alternatives for keeping the security issue in place.
Co-Chair Parnell asked why one-section states that the
security interest becomes unperfected and then Subsection
(c) stipulates that it does not render effective.
Mr. Weise clarified that the first clause of Subsection (a)
would not apply when there is a filing of a finance
statement. In that situation, Subsection (c) would apply.
He agreed that the system was quite complex.
Co-Chair Torgerson referenced a letter included in member's
files from Cynthia Weed at the State Bond Counsel. The
letter states that the exemption would not provide a
comprehensive exclusion to exempt pledges and liens granted
by the State and local government issuing revenue bonds.
The letter indicates that the language in the bill would
impact future bond issues and would place revenue bond
issues that are outstanding in the hands of investors.
Co-Chair Torgerson recommended further work done on the
bill in regards to the impact of outstanding revenue bonds
in the hands of investors.
Representative Murkowski interjected that the project
originated during an interim committee. She noted that
Cynthia Weed had been present at that Committee meeting.
The conversation at that time indicated that this was not
significant in the event of creating or continuing the
extension. She stated that this was the first time the
issue had arisen. Representative Murkowski urged members
to pass the bill, suggesting the issue could be resolved as
an exemption next year.
Co-Chair Torgerson maintained that the language was
"strong" and that the issue must be addressed before the
bill moves from the Senate Finance Committee.
Co-Chair Torgerson stated that HB 239 would be HELD in
Committee for further consideration.
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