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CLFP EXAM (Leasing Law) with Questions & Answers Graded A
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CLFP EXAM (Leasing Law) withQuestions & Answers Graded A
What is significant about UCC Article 2? - ✔✔Deals with the sale of goods which are generally
described as tangible personal property. Article 2 is relevant when the lessor may be the supplier or
vendor of the equipment. Article 2 offers "implied warranties" where the goods are assumed fit for use
for ordinary purposes.
What is significant about UCC Article 9? - ✔✔Deals exclusively with the creation of security interest
in personal property. It has not impact on leases, just secured loans.
What is a Financing Statement? - ✔✔With Secured Loans, lending files a UCC -1 financing statement
with the SOS publicly demonstrate a lenders security interest in the asset. Includes name and address of
the lender and debtor and a description of the equipment.
What are some key points in dealing with Article 9. - ✔✔1.) Article 9 does not apply to True Lease
2.) There is a good reason to file a UCC on a true lease as the filing itself may avoid an examination of
whether or not the lease is actually a secured loan. This helps in BK proceedings. Helps avoid unsecured
status.
3.) Purchase Money Security Interest are given 20 days to file UCC
4.) UCC do no supersede all types of claims including states, mechanic and landlord liens.
5.) UCC are not used for aircraft or motor vehicles covered by certificates of title unless held in
inventory.
6.) UCC vary state to state so local laws need be examined.
7.) Secured party = lender. Debtor = borrower.
What is significant about Article 2A? - ✔✔Article 2A deals only with true leases. Similar to 2,
includes implied warranty.
, How does Article 2A define Fiance Lease? - ✔✔Refers to a lease which is 1.) a true lease in which 2.)
lessor is not the manufacturer or vendor of the property. 3.) the lessor does not select the equipment
or lease it from inventory 4.) lessor makes sure lessee is apprised of its rights with the supplier
Why is Finance Lease significant to the lessor? - ✔✔1.) all warranties offered by the supplier are
deemed to pass to the lessee automatically 2.) hell or higher water clause which indicates the lessee
must pay the payments regardless of the performance of the equipment.
What is bankruptcy? - ✔✔Protection offered to individuals, corporations and other legal
entities giving them time to reorganize their debts. May be either "liquidating" or "reorganizing"
What is Chapter 7 Bankruptcy? - ✔✔A liquidating bankruptcy in which the entity will stop
operating and it assets will be sold to pay creditors.
What is Chapter 11 Bankruptcy? - ✔✔A re organizational bankruptcy in which the debtor has hopes
continuing to do business and returning to profitability. May propose "plan for reorganization" that
provides for a liquidation of business.
What is Chapter 9 Bankruptcy? - ✔✔Applies to government bankruptcies.
What is Chapter 12 Bankruptcy? - ✔✔Applies to family farm bankruptcies.
What is Chapter 13 Bankruptcy? - ✔✔Applies to individual bankruptcies.
What is Debtor in Possession? - ✔✔In Chapter 11 bk, debtor stays in control of its business
Describe the Bankruptcy Procedure. - ✔✔1.) filing petition (voluntary or involuntary)
2.) Automatic Stay - prohibit action against debtor other than through the court.
3.) If Chapter 11, prepare Plan of Reorganization which outlines repayment of debt.
4.) Assumption/Rejection of debt. Submitted prior to Plan of Reorganization, if accepted must be paid by
debtor per agreement. If rejected, lessor can recover equipment;
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