Goldberg Kohn

Retention of Title Disputes: Don’t Take the Uniform Commercial Code for Granted

Can a secured lender ever lose a retention-of-title fight? It shouldn't but it could. Goldberg Kohn's lawyers confronted such a challenge before a California bankruptcy court and prevailed, but the lessons learned from that legal challenge should be taken into account by secured lenders.

Based heavily on their successful bankruptcy litigation experience, Goldberg Kohn attorneys Jeremy Downs, David Morrison and Eva Gadzheva authored the attached article, Retention of Title Disputes: Don't Take the Uniform Commercial Code for Granted. In the article, Goldberg Kohn's attorneys explain how a secured lender to a US company can become embroiled in a priority dispute with an overseas vendor. If you have borrowers that buy goods from foreign suppliers, their distribution or supply agreements often attempt to apply foreign law – which may directly conflict with the UCC. Under some foreign laws, a vendor can try to retain title to your borrower's inventory until all amounts due to the vendor are paid. In that case, what happens when a borrower cannot repay both the vendor and its secured lender? Goldberg Kohn's article walks through how courts should determine what law applies (US or the foreign law of the vendor contract), and how a multi-step UCC analysis should resolve the dispute. In most instances, the law should favor secured lenders But, there are several steps in the complicated assessment that could also defeat a lender. Read the article to spot potential retention-of-title concerns on your next deal or workout.

If you have any questions about title-retention provisions or find your secured position being challenged in or outside of bankruptcy court, reach out to Jeremy Downs, David Morrison or Eva Gadzheva and we can set up a time to talk.

February 15, 2022

Questions? Contact:

Jeremy Downs

David Morrison

Eva Gadzheva

Bankruptcy & Creditors' Rights Practice Group

Litigation & Alternative Dispute Resolution Practice Group

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