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Official Comm. of Unsecured Creditors of Motors Liquidation Co. v. JPMorgan Chase Bank, N.A.

Supreme Court of Delaware

October 17, 2014

OFFICIAL COMMITTEE OF UNSECURED CREDITORS OF MOTORS LIQUIDATION COMPANY, Plaintiff-Appellant,
v.
JPMORGAN CHASE BANK, N.A., Individually and as Administrative Agent for various lenders party to the Term Loan Agreement described herein, Defendant-Appellee

Submitted October 8, 2014

Case Closed November 5, 2014.

Certification of Question of Law from the United States Court of Appeals for the Second Circuit. C.A. No. 13-2187-bk.

Norman M. Powell, Esquire, Elena C. Norman, Esquire, John J. Paschetto, Esquire, Richard J. Thomas, Esquire, Young Conaway Stargatt & Taylor, LLP, Wilmington, Delaware; Eric B. Fisher, Esquire (argued), Barry N. Seidel, Esquire, Katie L. Weinstein, Esquire, Dickstein Shapiro LLP, New York, New York; Jeffrey Rhodes, Esquire, Dickstein Shapiro LLP, Washington, District of Columbia, for Plaintiff-Appellant.

Gregory P. Williams, Esquire (argued), Brock E. Czeschin, Esquire, Susan M. Hannigan, Esquire, Richards, Layton & Finger, P.A., Wilmington, Delaware; John M. Callagy, Esquire, Nicholas J. Panarella, Esquire, Martin A. Krolewski, Esquire, Kelley Drye & Warren LLP, New York, New York; Steven O. Weise, Esquire, Proskauer Rose LLP, Los Angeles, California, for Defendant-Appellee.

Francis A. Monaco, Jr., Esquire, Ryan C. Cicoski, Esquire, Womble Carlyle Sandridge & Rice LLP, Wilmington, Delaware; Richard M. Kohn, Esquire, Jonathan N. Helfat, Esquire, Commercial Finance Association, for Amicus Curiae Commercial Finance Association.

Before STRINE, Chief Justice; HOLLAND and RIDGELY, Justices; LASTER, Vice Chancellor; [*] and COONIN, Judge,[*] constituting the Court en Banc.

OPINION

Page 1011

STRINE, Chief Justice:

I. INTRODUCTION

The United States Court of Appeals for the Second Circuit (" Second Circuit" ) has certified the following question of law important to a dispute pending before it:

Under UCC Article 9, as adopted into Delaware law by Del. Code Ann. tit. 6, art. 9, for a UCC-3 termination statement to effectively extinguish the perfected nature of a UCC-1 financing statement, is it enough that the secured lender review and knowingly approve for filing a UCC-3 purporting to extinguish the perfected security interest, or must the secured lender intend to terminate the particular security interest that is listed on the UCC-3?[1]

We more precisely answer by assuming that by the term " effectively extinguish," the Second Circuit asks whether reviewing the termination statement and knowingly approving it for filing has the effect specified in § 9-513 of the Delaware's version of the Uniform Commercial Code (" UCC" ), which is that " the financing statement to which the termination statement relates ceases to be effective." [2] Based on that understanding and for reasons we explain more fully, the unambiguous provisions of Delaware's UCC dictate that the answer is that " it [is] enough that the secured lender review and knowingly approve for filing a UCC-3 purporting to extinguish the perfected

Page 1012

security interest." [3] Under the Delaware UCC, parties in commerce are entitled to rely upon a filing authorized by a secured lender and assume that the secured lender ...


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