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Case Citation
Legal Case Name

Motors Liquidation Co. v. JP Morgan Chase Bank, N.A. Case Brief

Court of Appeals for the Second Circuit2015Docket #65660951
777 F.3d 100 85 U.C.C. Rep. Serv. 2d (West) 592 2015 WL 252318 2015 U.S. App. LEXIS 859 60 Bankr. Ct. Dec. (CRR) 136 Secured Transactions Agency & Partnership Bankruptcy Contracts

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Case Brief Summary & Legal Analysis

General Brief
4 min read

tl;dr: A lender’s agent mistakenly filed a UCC-3 termination statement for a $1.5 billion loan. The court held the termination was effective because the lender had authorized the act of filing the specific document, regardless of its mistaken subjective intent to terminate the underlying security interest.

Legal Significance: Under UCC § 9-509, a secured party’s authorization of the act of filing a termination statement is sufficient for effectiveness. This prioritizes the public record’s certainty over the filer’s subjective intent, holding parties accountable for their filings, even when made in error.

Motors Liquidation Co. v. JP Morgan Chase Bank, N.A. Law School Study Guide

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Case Facts & Court Holding

Key Facts & Case Background

JPMorgan Chase Bank, N.A. (“JPMorgan”) was the administrative agent for two distinct General Motors (“GM”) financings: a $300 million Synthetic Lease and a $1.5 billion Term Loan, both perfected by UCC-1 financing statements. When GM sought to pay off the Synthetic Lease, its counsel, Mayer Brown, was tasked with preparing documents to release the corresponding security interests. A paralegal at Mayer Brown conducted a UCC search and mistakenly included the UCC-1 financing statement for the unrelated $1.5 billion Term Loan on the list of liens to be terminated. Consequently, Mayer Brown drafted a UCC-3 termination statement for the Term Loan security interest. These draft documents, including a closing checklist that explicitly identified the Term Loan UCC-1 for termination, were circulated to JPMorgan and its own counsel, Simpson Thacher, for review. Neither party identified the error. JPMorgan’s counsel approved the documents for filing. Upon closing, Mayer Brown filed all prepared UCC-3s, including the one erroneously terminating the $1.5 billion Term Loan security interest. The error was discovered during GM’s subsequent bankruptcy, prompting the Unsecured Creditors’ Committee to seek a declaration that the termination was effective.

Court Holding & Legal Precedent

Issue: Is a UCC-3 termination statement effective under UCC § 9-509(d)(1) when a secured party authorizes the filing of the statement but, due to a clerical error, did not subjectively intend to terminate the specific security interest identified therein?

Yes. The court held that the UCC-3 termination statement was effective because Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit

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Legal Issue

Is a UCC-3 termination statement effective under UCC § 9-509(d)(1) when a secured party authorizes the filing of the statement but, due to a clerical error, did not subjectively intend to terminate the specific security interest identified therein?

Conclusion

This case establishes that under UCC Article 9, the authorization of the Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in

Legal Rule

Under Delaware's UCC § 9-509(d)(1), a UCC-3 termination statement is effective if Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat n

Legal Analysis

The court's analysis proceeded in two steps. First, it adopted the Delaware Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididun

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Flash Summary

  • An erroneously filed UCC-3 termination statement is effective if the secured
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa

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