Agriculture Issues: Secret Liens, Food Security Act
The Food Security Act and statutory liens can have unintended consequences for secured creditors in agricultural bankruptcy cases. Absent lender compliance with federal notice procedures, the FSA strips security interests from farm products sold in the ordinary course of business — and statutory liens may also prime a secured creditor’s interest. This panel discusses the interplay between state law controlling the creation, perfection and priority of security interests in farm products, and the Food Security Act in cutting off security interests in farm products purchased in the ordinary course of business. The panelists explain how to preserve such interests by complying with direct notice or central filing system notice procedures. They also cover the various state and federal “secret” statutory liens that can pop up and prime a secured lender’s security interest, and how to protect against them.
Sponsored by Huron Consulting Group Inc.