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GK Attorneys Co-Author SFNet Opposition to Permanent Editorial Board Commentary – Injunction Against a Noncomplying Disposition Under Section 9-610

Proposed expansion of Section 9-625(a) is inconsistent with the UCC terms, structure and purpose and could lead to negative consequences for commercial lending

November 16, 2021
Secured Finance Network

Section 9-625(a) of the Uniform Commercial Code allows courts to enjoin the disposition of collateral on appropriate terms and conditions where the secured party has not complied with the UCC. That section, however, does not establish any principles that courts should follow in determining whether an injunction is an appropriate remedy. Section 1-103(b) of the UCC provides that, unless displaced, the provisions of the UCC are supplemented by principles of law and equity.

On September 8, 2021, the Permanent Editorial Board for the Uniform Commercial Code (the "PEB") released for review and comment a proposed revision to Official Comment 2 to Section 9-625. The PEB's commentary asserts that courts often reject requests to enjoin dispositions of collateral where the secured party has not complied with the UCC based solely on application of state equitable principles limiting relief when the aggrieved party has a collectable money damages remedy. The PEB argues that this approach is inconsistent with Section 9-625(a) and that, notwithstanding Section 1-103(b), the court retains the discretion to issues injunction even in cases where money damages are available. 

SFNet recently submitted the following response in opposition to the PEB's commentary, arguing that PEB's interpretation and proposed expansion of Section 9-625(a) is inconsistent with the terms, structure and purpose of the UCC and, if implemented, could lead to negative consequences for commercial lending. The response was written by GK's Bankruptcy Practice co-chair Randall Klein and associate Eva Gadzheva

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Chicago, Illinois 60603-5792
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