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All Jurisprudence based

0 tracked cards Civil Law and Land Titles and Deeds

Creditor: Flux Credit Partners, LLC. Debtor: NovaFlow Industries. The loan is secured by a security interest in Debtor's funds held in a cash-management trust account (CMTA) at Bank Meridian. A Control Agreement is executed among Debtor, Bank Meridian, and Flux, providing that Bank Meridian will honor Flux's instructions regarding the CMTA and will not permit withdrawals by Debtor without Flux's directive. Debtor defaults, and Bank Meridian complies with Flux's directives, preventing any withdrawal by Debtor. (a) Has Flux's security interest been perfected by control? (b) State the governing rule and the essential elements for perfection by control under RA 11057. (c) If Debtor terminates the CMTA at Bank Meridian and opens a new CMTA at Bank Citadel, what is the effect on Flux's control and perfection, and what steps are necessary to preserve perfection?

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Yes. Control by the secured party exists only against non-consenting third parties; the debtor remains free to withdraw if Flux has not explicitly restricted withdrawals. Yes. Flux’s security interest is perfected by control because a valid Control Agreement exists and Bank Meridian will follow Flux’s instructions and block withdrawals by Debtor; to preserve perfection if the Debtor moves to Bank Citadel, Flux must obtain a new Control Agreement with Bank Citadel. No. RA 11057 does not apply to cash-management trust accounts; perfection would require a separate filing. Yes. Perfection by control exists, but moving to Bank Citadel terminates Flux’s control automatically unless Flux re-establishes control with Bank Citadel via a new agreement.

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