Priority in Foreclosure and Debt Collection Self-Quiz
Stella held a security interest
in Stew’s stereo, for money that she loaned him to purchase his
car. Stew was 18 months behind on his payment, was constantly refusing
to take Stella’s calls and would not come to the door when she went
to his house to collect the stereo. On one such trip to Stew’s house,
Stella knocked on the door and got no response. She then went around the
back of the house and saw that the back door was completely open. Seeing
no one inside, Stella walked into the house, found the stereo, disconnected
it from the wall and took it. Stella:
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NewCo, Inc. and OldCo, Inc.
have entered into a transaction where OldCo. has taken a security interest
in NewCo’s operating machinery. However, unbeknownst to OldCo, another
company – OtherCo – already had a perfected security interest
in the machinery. In a foreclosure proceeding, who will take the asset?
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Gladys buys a dress from
DressItUp, Inc. She purchased the dress off the rack, not knowing that
ClothersCo had an inventory-based security interest, with an “after
acquired” clause in all the clothing on DressItUp’s retail
floor. If ClothersCo subsequently forecloses on its note to DressItUp,
Gladys will have to:
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