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| Example 5: Debtor is a Pennsylvania corporation. Debtor grants | | to Lender a security interest in Debtor's existing and after- | | acquired inventory. Lender perfects by filing in Pennsylvania. | | Debtor's shareholders decide to "reincorporate" in Delaware. They | | form a Delaware corporation (Newcorp) into which they merge Debtor. | | By virtue of the merger, Newcorp becomes bound by Debtor's security | | agreement. See Section 9-203 [Maine cite section 9-1203]. After | | the merger, Newcorp acquires inventory to which Lender's security | | interest attaches. Because Newcorp is located in Delaware, | | Delaware law governs perfection of a security interest in Newcorp's | | inventory. See Sections 9-301, 9-307 [Maine cite sections 9-1301, | | 9-1307]. Having failed to perfect under Delaware law, Lender holds | | an unperfected security interest in the inventory acquired by | | Newcorp after the merger. The same result follows regardless of | | the name of the Delaware corporation (i.e., even if the Delaware | | corporation and Debtor have the same name). |
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| | | 3. Retroactive Unperfection. Subsection (b) [Maine cite | | subsection (2)] sets forth the consequences of the failure to | | reperfect before perfection ceases under subsection (a) [Maine | | cite subsection (1)]: the security interest becomes unperfected | | prospectively and, as against purchasers for value, including | | buyers and secured parties, but not as against donees or lien | | creditors, retroactively. The rule applies to agricultural | | liens, as well. See also Section 9-515 [Maine cite section 9- | | 1515] (taking the same approach with respect to lapse). Although | | this approach creates the potential for circular priorities, the | | alternative-retroactive unperfection against lien creditors-would | | create substantial and unjustifiable preference risks. |
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| | | Example 6: Under the facts of Example 4, six months after the | | merger, Buyer bought from Newcorp some equipment formerly owned | | by Debtor. At the time of the purchase, Buyer took subject to | | Lender's perfected security interest, of which Buyer was unaware. | | See Section 9-315(a)(1) [Maine cite section 9-1315, subsection | | (1), paragraph (a)]. However, subsection (b) [Maine cite | | subsection (2)] provides that if Lender fails to reperfect in | | Delaware within a year after the merger, its security interest | | becomes unperfected and is deemed never to have been perfected | | against Buyer. Having given value and received delivery of the | | equipment without knowledge of the security interest and before | | it was perfected, Buyer would take free of the security interest. | | See Section 9-317(b) [Maine cite section 9-1317, subsection (2)]. |
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| | | Example 7: Under the facts of Example 4, one month before the | | merger, Debtor created a security interest in certain |
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