Revised Article 9 Meets the Bankruptcy Code: Policy and Impact

The development of the law governing security interests in personal property has been characterized by repeated judicial and legislative battles between unsecured and secured creditors. The principal point of conflict has been when and under what circumstances the former may reach collateral claimed by the latter. For many years, under Article 9 of the Uniform Commercial Code, debtors generally have been able to secure any and all of their obligations with any and all of their existing and after acquired personal property. This state of affairs will continue under Revised Article 9.

Revised Article 9 will become effective in at least 31 states and the District of Columbia on July 1, 2001. It has been introduced in 20 other jurisdictions, and plans are at hand to introduce it in others. Accordingly, this is a propitious time to examine closely the substantive rules and standards that Revised Article 9 embodies and to anticipate the likely social effects of the revision. Inasmuch as the distributive effects of secured credit are most pronounced when a debtor becomes insolvent, it is particularly appropriate to address the likely effects of Revised Article 9 in bankruptcy.

The articles in this symposium issue will provide a valuable resource for practitioners, judges, and academics alike as we begin to live with Revised Article 9 not as a proposal but as the governing law. This article begins by addressing the relationship between Revised Article 9 and the policies that underlie the Bankruptcy Code. We argue in part I that Revised Article 9 is fully consistent with those policies. We then consider in part 11 the revised Article's likely impact, in both quality and degree, on a debtor's unsecured creditors.