AB 549

In

2001 Wisconsin Act 10

, this state adopted the Revised Uniform Commercial

Code (UCC) Article 9-Secured Transactions, which was approved by the National

Conference of Commissioners on Uniform State Laws (NCCUSL) in 1998, with

amendments approved by NCCUSL in 1999 and 2000. UCC Article 9 governs

transactions that involve the granting of credit secured by personal property of a

debtor. The creditor's interest is called a "security interest." UCC Article 9 regulates

the creation and enforcement of security interests in movable property, intangible

property, and fixtures (items of personal property affixed to real property), but not

in real property. Under UCC Article 9, if a debtor defaults, the creditor may

repossess and sell the property (generally called collateral) to satisfy the debt. A

creditor with a "perfected" security interest usually has "priority" in the distribution

of the debtor's assets as compared to creditors with later-acquired security interests

(junior secured creditors) and unsecured creditors. Before or at the time a security

interest is perfected, it must "attach." Attachment arises when the security interest

becomes effective between the creditor and the debtor and usually occurs when their

security agreement becomes effective. Perfection of a security interest establishes

the creditor's priority in relation to other creditors of the debtor in the same collateral

and usually occurs with the filing by the creditor of a "financing statement" in a

central filing office - in Wisconsin, the Department of Financial Institutions (DFI).

(The only local filing of financing statements, in the local real estate records, is for

security interests in fixtures or in certain land-related collateral such as timber.)

However, filing a financing statement is not the only method for perfection,

depending upon the kind of property that is collateral. Possession of collateral by the

secured party is an alternative method of perfection for many kinds of collateral, and

"control" is the method of perfection for certain kinds of collateral.

This bill adopts the 2010 amendments to UCC Article 9 approved by NCCUSL.

Among the changes to UCC Article 9 are the following:

1. The bill makes modifications with respect to how a debtor's name must be

identified on a financing statement. Most significantly, if the debtor is an individual

to whom the Department of Transportation (DOT) has issued an operator's license

or identification card that has not expired, the financing statement, to be sufficient,

must provide the name of the individual as it appears on the operator's license or

identification card. If the debtor is an individual who does not hold an unexpired

DOT-issued operator's license or identification card, the financing statement must

provide the individual name of the debtor or the surname and first personal name

of the debtor. The bill also makes changes as to how the debtor's name must appear

on a financing statement whenever collateral is held in a trust and also requires

certain additional information on the financing statement if collateral is held in a