AB111: Bill Text

AB111,90,9 (3) Special priority rules: proceeds and supporting obligations. Except as otherwise provided in sub. (6), a security interest in collateral which qualifies for priority over a conflicting security interest under s. 409.327, 409.328, 409.329, 409.330, or 409.331 also has priority over a conflicting security interest in:

AB111,90,10 (a) Any supporting obligation for the collateral; and

AB111,90,11 (b) Proceeds of the collateral if:

AB111,90,12 1. The security interest in proceeds is perfected;

AB111,90,13 2. The proceeds are cash proceeds or of the same type as the collateral; and

AB111,90,16 3. In the case of proceeds that are proceeds of proceeds, all intervening proceeds are cash proceeds, proceeds of the same type as the collateral, or an account relating to the collateral.

AB111,90,22 (4) First-to-file priority rule for certain collateral. Subject to sub. (5) and except as otherwise provided in sub. (6), if a security interest in chattel paper, deposit accounts, negotiable documents, instruments, investment property, or letter-of-credit rights is perfected by a method other than filing, conflicting perfected security interests in proceeds of the collateral rank according to priority in time of filing.

AB111,90,25 (5) Applicability of sub. (4). Subsection (4) applies only if the proceeds of the collateral are not cash proceeds, chattel paper, negotiable documents, instruments, investment property, or letter-of-credit rights.

AB111,91,1 (6) Limitations on subs. (1) to (5). Subsections (1) to (5) are subject to:

AB111,91,2 (a) Subsection (7) and the other provisions of this subchapter;

AB111,91,3 (b) Section 404.210 with respect to a security interest of a collecting bank;

AB111,91,5 (c) Section 405.118 with respect to a security interest of an issuer or nominated person; and

AB111,91,7 (d) Section 409.110 with respect to a security interest arising under ch. 402 or 411.

AB111,91,10 (7) Priority under agricultural lien statute. A perfected agricultural lien on collateral has priority over a conflicting security interest in or agricultural lien on the same collateral if the statute creating the agricultural lien so provides.

AB111,91,15 409.323 Future advances. (1) When priority based on time of advance. Except as otherwise provided in sub. (3), for purposes of determining the priority of a perfected security interest under s. 409.322 (1) (a), perfection of the security interest dates from the time an advance is made to the extent that the security interest secures an advance that:

AB111,91,16 (a) Is made while the security interest is perfected only:

AB111,91,17 1. Under s. 409.309 when it attaches; or

AB111,91,18 2. Temporarily under s. 409.312 (5), (6), or (7); and

AB111,91,21 (b) Is not made pursuant to a commitment entered into before or while the security interest is perfected by a method other than under s. 409.309 or 409.312 (5), (6), or (7).

AB111,91,25 (2) Lien creditor. Except as otherwise provided in sub. (3), a security interest is subordinate to the rights of a person that becomes a lien creditor to the extent that the security interest secures an advance made more than 45 days after the person becomes a lien creditor unless the advance is made:

AB111,92,1 (a) Without knowledge of the lien; or

AB111,92,2 (b) Pursuant to a commitment entered into without knowledge of the lien.

AB111,92,5 (3) Buyer of receivables. Subsections (1) and (2) do not apply to a security interest held by a secured party that is a buyer of accounts, chattel paper, payment intangibles, or promissory notes or a consignor.

AB111,92,8 (4) Buyer of goods. Except as otherwise provided in sub. (5), a buyer of goods other than a buyer in ordinary course of business takes free of a security interest to the extent that it secures advances made after the earlier of:

AB111,92,9 (a) The time the secured party acquires knowledge of the buyer's purchase; or

AB111,92,10 (b) Forty-five days after the purchase.

AB111,92,14 (5) Advances made pursuant to commitment: priority of buyer of goods. Subsection (4) does not apply if the advance is made pursuant to a commitment entered into without knowledge of the buyer's purchase and before the expiration of the 45-day period.

AB111,92,17 (6) Lessee of goods. Except as otherwise provided in sub. (7), a lessee of goods, other than a lessee in ordinary course of business, takes the leasehold interest free of a security interest to the extent that it secures advances made after the earlier of:

AB111,92,18 (a) The time the secured party acquires knowledge of the lease; or

AB111,92,19 (b) Forty-five days after the lease contract becomes enforceable.

AB111,92,23 (7) Advances made pursuant to commitment: priority of lessee of goods. Subsection (6) does not apply if the advance is made pursuant to a commitment entered into without knowledge of the lease and before the expiration of the 45-day period.

AB111,93,5 409.324 Priority of purchase-money security interests. (1) General rule: purchase-money priority. Except as otherwise provided in sub. (7), a perfected purchase-money security interest in goods other than inventory or livestock has priority over a conflicting security interest in the same goods, and, except as otherwise provided in s. 409.327, a perfected security interest in its identifiable proceeds also has priority, if the purchase-money security interest is perfected when the debtor receives possession of the collateral or within 20 days thereafter.

AB111,93,14 (2) Inventory purchase-money priority. Subject to sub. (3) and except as otherwise provided in sub. (7), a perfected purchase-money security interest in inventory has priority over a conflicting security interest in the same inventory, has priority over a conflicting security interest in chattel paper or an instrument constituting proceeds of the inventory and in proceeds of the chattel paper, if so provided in s. 409.330, and, except as otherwise provided in s. 409.327, also has priority in identifiable cash proceeds of the inventory to the extent that the identifiable cash proceeds are received on or before the delivery of the inventory to a buyer, if:

AB111,93,16 (a) The purchase-money security interest is perfected when the debtor receives possession of the inventory;

AB111,93,18 (b) The purchase-money secured party sends an authenticated notification to the holder of the conflicting security interest;

AB111,93,20 (c) The holder of the conflicting security interest receives the notification within 5 years before the debtor receives possession of the inventory; and

AB111,93,23 (d) The notification states that the person sending the notification has or expects to acquire a purchase-money security interest in inventory of the debtor and describes the inventory.

AB111,94,3 (3) Holders of conflicting inventory security interests to be notified. Subsection (2) (b) to (d) applies only if the holder of the conflicting security interest had filed a financing statement covering the same types of inventory:

AB111,94,5 (a) If the purchase-money security interest is perfected by filing, before the date of the filing; or

AB111,94,8 (b) If the purchase-money security interest is temporarily perfected without filing or possession under s. 409.312 (6), before the beginning of the 20-day period thereunder.

AB111,94,14 (4) Livestock purchase-money priority. Subject to sub. (5) and except as otherwise provided in sub. (7), a perfected purchase-money security interest in livestock that are farm products has priority over a conflicting security interest in the same livestock, and, except as otherwise provided in s. 409.327, a perfected security interest in their identifiable proceeds and identifiable products in their unmanufactured states also has priority, if:

AB111,94,16 (a) The purchase-money security interest is perfected when the debtor receives possession of the livestock;

AB111,94,18 (b) The purchase-money secured party sends an authenticated notification to the holder of the conflicting security interest;

AB111,94,20 (c) The holder of the conflicting security interest receives the notification within 6 months before the debtor receives possession of the livestock; and

AB111,94,23 (d) The notification states that the person sending the notification has or expects to acquire a purchase-money security interest in livestock of the debtor and describes the livestock.

AB111,95,3 (5) Holders of conflicting livestock security interests to be notified. Subsection (4) (b) to (d) applies only if the holder of the conflicting security interest had filed a financing statement covering the same types of livestock:

AB111,95,5 (a) If the purchase-money security interest is perfected by filing, before the date of the filing; or

AB111,95,8 (b) If the purchase-money security interest is temporarily perfected without filing or possession under s. 409.312 (6), before the beginning of the 20-day period thereunder.

AB111,95,15 (6) Software purchase-money priority. Except as otherwise provided in sub. (7), a perfected purchase-money security interest in software has priority over a conflicting security interest in the same collateral, and, except as otherwise provided in s. 409.327, a perfected security interest in its identifiable proceeds also has priority, to the extent that the purchase-money security interest in the goods in which the software was acquired for use has priority in the goods and proceeds of the goods under this section.

AB111,95,17 (7) Conflicting purchase-money security interests. If more than one security interest qualifies for priority in the same collateral under sub. (1), (2), (4), or (6):

AB111,95,20 (a) A security interest securing an obligation incurred as all or part of the price of the collateral has priority over a security interest securing an obligation incurred for value given to enable the debtor to acquire rights in or the use of collateral; and

AB111,95,21 (b) In all other cases, s. 409.322 (1) applies to the qualifying security interests.

AB111,95,25 409.325 Priority of security interests in transferred collateral. (1) Subordination of security interest in transferred collateral. Except as otherwise provided in sub. (2), a security interest created by a debtor is subordinate to a security interest in the same collateral created by another person if:

AB111,96,2 (a) The debtor acquired the collateral subject to the security interest created by the other person;

AB111,96,4 (b) The security interest created by the other person was perfected when the debtor acquired the collateral; and

AB111,96,5 (c) There is no period thereafter when the security interest is unperfected.

AB111,96,7 (2) Limitation of sub. (1) subordination. Subsection (1) subordinates a security interest only if the security interest:

AB111,96,8 (a) Otherwise would have priority solely under s. 409.322 (1) or 409.324; or

AB111,96,9 (b) Arose solely under s. 402.711 (3) or 411.508 (5).

AB111,96,16 409.326 Priority of security interests created by new debtor. (1) Subordination of security interest created by new debtor. Subject to sub. (2), a security interest created by a new debtor which is perfected by a filed financing statement that is effective solely under s. 409.508 in collateral in which a new debtor has or acquires rights is subordinate to a security interest in the same collateral which is perfected other than by a filed financing statement that is effective solely under s. 409.508.

AB111,96,23 (2) Priority under other provisions; multiple original debtors. The other provisions of this subchapter determine the priority among conflicting security interests in the same collateral perfected by filed financing statements that are effective solely under s. 409.508. However, if the security agreements to which a new debtor became bound as debtor were not entered into by the same original debtor, the conflicting security interests rank according to priority in time of the new debtor's having become bound.

AB111,97,3 409.327 Priority of security interests in deposit account. The following rules govern priority among conflicting security interests in the same deposit account:

AB111,97,6 (1) Control by secured party. A security interest held by a secured party having control of the deposit account under s. 409.104 has priority over a conflicting security interest held by a secured party that does not have control.

AB111,97,9 (2) Priority in time of control. Except as otherwise provided in subs. (3) and (4), security interests perfected by control under s. 409.314 rank according to priority in time of obtaining control.

AB111,97,13 (3) Priority of bank regarding deposit account. Except as otherwise provided in sub. (4), a security interest held by the bank with which the deposit account is maintained has priority over a conflicting security interest held by another secured party.

AB111,97,16 (4) Priority over bank regarding deposit account. A security interest perfected by control under s. 409.104 (1) (c) has priority over a security interest held by the bank with which the deposit account is maintained.

AB111,97,19 409.328 Priority of security interests in investment property. The following rules govern priority among conflicting security interests in the same investment property:

AB111,97,23 (1) Control by secured party. A security interest held by a secured party having control of investment property under s. 409.106 has priority over a security interest held by a secured party that does not have control of the investment property.

AB111,98,3 (2) Priority in time of control. Except as otherwise provided in subs. (3) and (4), conflicting security interests held by secured parties each of which has control under s. 409.106 rank according to priority in time of:

AB111,98,4 (a) If the collateral is a security, obtaining control;

AB111,98,5 (b) If the collateral is a security entitlement carried in a securities account and:

AB111,98,7 1. If the secured party obtained control under s. 408.106 (4) (a), the secured party's becoming the person for which the securities account is maintained;

AB111,98,10 2. If the secured party obtained control under s. 408.106 (4) (b), the securities intermediary's agreement to comply with the secured party's entitlement orders with respect to security entitlements carried or to be carried in the securities account; or

AB111,98,13 3. If the secured party obtained control through another person under s. 408.106 (4) (c), the time on which priority would be based under this subsection if the other person were the secured party; or

AB111,98,17 (c) If the collateral is a commodity contract carried with a commodity intermediary, the satisfaction of the requirement for control specified in s. 409.106 (2) (b) with respect to commodity contracts carried or to be carried with the commodity intermediary.

AB111,98,21 (3) Priority of securities intermediary regarding entitlement or account. A security interest held by a securities intermediary in a security entitlement or a securities account maintained with the securities intermediary has priority over a conflicting security interest held by another secured party.

AB111,98,25 (4) Priority of securities intermediary regarding contract or account. A security interest held by a commodity intermediary in a commodity contract or a commodity account maintained with the commodity intermediary has priority over a conflicting security interest held by another secured party.

AB111,99,4 (5) Priority in certificated securities. A security interest in a certificated security in registered form which is perfected by taking delivery under s. 409.313 (1) and not by control under s. 409.314 has priority over a conflicting security interest perfected by a method other than control.

AB111,99,7 (6) Priority of conflicting security interests; intermediaries. Conflicting security interests created by a broker, securities intermediary, or commodity intermediary which are perfected without control under s. 409.106 rank equally.

AB111,99,10 (7) Priority of conflicting security interests; others. In all other cases, priority among conflicting security interests in investment property is governed by ss. 409.322 and 409.323.

AB111,99,13 409.329 Priority of security interests in letter-of-credit right. The following rules govern priority among conflicting security interests in the same letter-of-credit right:

AB111,99,17 (1) Control by secured party. A security interest held by a secured party having control of the letter-of-credit right under s. 409.107 has priority to the extent of its control over a conflicting security interest held by a secured party that does not have control.

AB111,99,19 (2) Priority in time of control. Security interests perfected by control under s. 409.314 rank according to priority in time of obtaining control.

AB111,99,23 409.330 Priority of purchaser of chattel paper or instrument. (1) Purchaser's priority: security interest claimed merely as proceeds. A purchaser of chattel paper has priority over a security interest in the chattel paper which is claimed merely as proceeds of inventory subject to a security interest if:

AB111,100,3 (a) In good faith and in the ordinary course of the purchaser's business, the purchaser gives new value and takes possession of the chattel paper or obtains control of the chattel paper under s. 409.105; and

AB111,100,5 (b) The chattel paper does not indicate that it has been assigned to an identified assignee other than the purchaser.

AB111,100,12 (2) Purchaser's priority: other security interests. A purchaser of chattel paper has priority over a security interest in the chattel paper which is claimed other than merely as proceeds of inventory subject to a security interest if the purchaser gives new value and takes possession of the chattel paper or obtains control of the chattel paper under s. 409.105 in good faith, in the ordinary course of the purchaser's business, and without knowledge that the purchase violates the rights of the secured party.

AB111,100,15 (3) Chattel paper purchaser's priority in proceeds. Except as otherwise provided in s. 409.327, a purchaser having priority in chattel paper under sub. (1) or (2) also has priority in proceeds of the chattel paper to the extent that:

AB111,100,16 (a) Section 409.322 provides for priority in the proceeds; or