May 2001

It now appears that the Uniform Commercial Code Modernization Act of 2001, Senate Bill 330 which contains a complete rewrite of Article 9 of the Uniform Commercial Code (secured transactions) will be adopted by Pennsylvania prior to the National Uniform effective date of July 1, 2001. The bill also contains a rewrite of Article 5 of the Uniform Commercial Code (letters of credit). To date 47 states have adopted the Article 5 revisions and at least 29 states of adopted the Article 9 revisions.

Revisions to Article 9 contain significant changes in the definitional portions of Article 9 and will expand the scope of Article 9 to include more types of property and transactions, including creating a separate new category called "Health Care Insurance Receivables" and significantly changing the methods of dealing with deposit accounts. The revisions to Article 9 will modernize the law to facilitate electronic commerce and will streamline the process for filing financial statements to perfect security interests. In Pennsylvania this will involve the elimination of the dual filing system. The revisions also modernize rules governing perfection and priorities, default and enforcement. Among the changes of special interest to Pennsylvania lawyers will be the fact that the assembled economic unit doctrine, virtually unique in Pennsylvania, will be eliminated.

In order to ensure that the personnel of Rhoads & Sinon LLP are up-to-date concerning the changes to Article 9, Bruce Walter, a Partner in the firm, will be presenting an in-house seminar alerting Rhoads & Sinon attorneys and staff to significant changes in Article 9. Mr. Walter is a member of the Article 9 Task Force of the Business Law Section of the Pennsylvania Bar Association responsible for the review and presentation of the proposed Article 9 changes to the General Assembly of Pennsylvania.