Section 37 Strict Foreclosure or Acceptance of Collateral

• Library: Secured Transactions 2005

The former Article 9 limited strict foreclosure or acceptance of collateral to tangible collateral in the secured creditor’s possession. For this reason, general intangibles could not
be the subject of a strict foreclosure. Furthermore, a secured creditor that utilized strict foreclosure was precluded from obtaining a deficiency against the debtor and obligors. Revised Article 9, though, allows partial strict foreclosure of any collateral, including general intangibles, but the strict foreclosure must be “accepted” by the debtor in writing after the default. See § 400.9-620(c)(1), RSMo Supp. 2004. Also, for collateral that is not consumer goods, possession by the secured creditor is no longer a requirement for strict foreclosure under Revised Article 9. See § 400.9-620(a)(3).

But there are several rather technical requirements to any such acceptance:

• The debtor must properly consent to the acceptance

• Notification of the proposed acceptance must be sent to any person from whom the secured party has received an authenticated notification of a claim of an interest in the collateral, or any other secured party who, ten days before the notice, held a security interest or lien in the collateral perfected by a filed financing statement or perfected in compliance with any other statute...