Flashcards Studio

Under Secs. 3 and 4 of the Personal Property Security Act (R.A. 11057), (a) identify the definitional terms in Sec. 3 that govern what constitutes collateral and who are the debtor and secured party, and briefly describe their meanings as used in the statute; (b) describe the scope of the Act as set forth in Sec. 4, including which kinds of personal property and transactions are covered and whether proceeds are included; (c) apply to the following facts: TerraNova Farms, Inc. (debtor) obtains a secured loan from Atlantic Bank. The Security Agreement covers “all present and future personal property” of TerraNova, expressly listing timber inventories, fertilizer stock, accounts receivable, and farming equipment as collateral. Atlantic Bank files a financing statement. TerraNova later sells timber to TimberHub, a buyer who has no knowledge of the security interest. TerraNova also enters into a factoring arrangement with FlowFin to sell post-sale receivables arising from the TimberHub sale. Discuss (i) which asset categories fall within the Act’s definitional and scope; (ii) whether the security interest extends to (A) the sold timber, (B) the cash proceeds from the sale, and (C) the post-sale receivables arising from the factoring arrangement.