The Second Edition Of Forms Under Revised Article 9: A Welcome Guide For The Secured Transactions Attorney

Saturday, September 1, 2007 - 01:00

Editor: Ms. Chernuchin, please tell our readers about your background and professional experience.

Chernuchin: I am twice a graduate of Cornell, undergraduate and law school. I began my career at Kelley Drye & Warren in 1984 and then moved on to other firms to pursue a real estate practice. In 1990, with the arrival of my first child, I decided to take a break from the law to be an at-home mom.

After six years, and more importantly the beginning of my children's academic careers, I decided to rejoin the workforce. I wanted a permanent professional home - so I went about my search very carefully. Willkie Farr appeared to be a very nurturing place, and I believed it would respect my family life. Now, after more than ten years at Willkie, I can confirm this.

I began at Willkie in their real estate financing group and switched to corporate financing in 1998. At the time, Article 9 of the Uniform Commercial Code was being revised so it was a perfect time to switch. Article 9's scope was being expanded to cover more transactions and types of collateral, some collateral was being reclassified and the rules for determining which state's law governs were changing, as were foreclosure options and procedures. For example, old Article 9 did not cover deposit accounts or commercial tort claims as original collateral, and the new Article 9 does. Also, (generally) we used to perfect the secured party's security interest in equipment by filing a financing statement in the state where the equipment was located and in intangible collateral by filing in the state of the location of the debtor's chief executive office; now we perfect such security interest in equipment and intangible collateral by filing where the debtor is located. In effect, the revisions to Article 9 made it more "user friendly." The good news for me was that all corporate finance attorneys had to learn new Article 9, so even though I was fresh to the area I was not behind! In time I became the Willkie Article 9 specialist.

Editor: What types of client do you represent?

Chernuchin: I represent borrowers, issuers, banks and institutional lenders in a wide array of financing, including asset-based lending, acquisition financing, debtor-in-possession financing and workouts. As part of my practice I have worked on the acquisition financing for The Bank of Nova Scotia and the portfolio companies of Warburg Pincus Equity Partners and related funds (for example, Telcordia Technologies, Inc., Transdigm, Inc., Polypore, Inc.), Colony Capital LLC and its affiliates (including facilities in connection with the acquisition of various hotel casinos by Resorts International Holdings, LLC, Raffles and Swissotel hotels and the Fairmont Hotel chain), revolving and term facilities for among others, Level 3 Finance, LLC and debtor-in- possession financings, for example, for Space Systems/Loral, Inc.

Editor: You have also enjoyed a parallel career with a number of professional associations, including the New York State Bar Association, the Association of the Bar of the City of New York and the American Bar Association. Please tell us about your progress up the leadership ladder in these bar associations.

Chernuchin: All of my bar association committee work is a natural progression of my practice. At the ABA, for instance, I am chair of the Article 9 Forms Task Force and an active member of the Deposit Account Control Agreement Task Force. It is a two-way street: the transactional work that I handle at Willkie enhances what I bring to my committee work, and the latter makes me a more effective practitioner at Willkie. As with everything, the more one contributes, the more one is asked to contribute, and that results in being asked to take on leadership responsibilities .

I am also very involved with Flex-time Lawyers, an organization designed to help part-time attorneys who are also their children's primary care givers. In addition, I am an active member of Willkie's Women Professional Development Committee, which supports young female Willkie attorneys making their way up the ladder. I feel that my efforts in this area help to make the world a better place for all of us, and most particularly our children.

Editor: You mentioned being chair of the American Bar Association's Uniform Commercial Code Task Force on Article 9 Forms. For starters, what is the task force's composition and what is its mandate?

Chernuchin: The task force currently has about 220 members. Not all are active members, of course, but those who are include almost the entire leadership of the ABA's Uniform Commercial Code Committee. The task force also includes a number of people who are the leaders of other committees within the Business Law Section. The task force's charge is to prepare another edition of the Article 9 forms book, the Second Edition of Forms Under Revised Article 9.

Editor: What is the timeline?

Chernuchin: We are hoping to put the book into the ABA's publication cycle at the end of December. It should be published sometime in 2008.

Editor: How about implementation? When the task force comes up with a set of forms, what happens to them?

Chernuchin: The task force's work is reviewed pursuant to the normal editorial process of the ABA's Publications Committee. It will also be reviewed by the chair of the Uniform Commercial Code Committee. Once that process is completed, it moves on into the publication cycle. This project will not be submitted to the House of Delegates prior to publication.

Editor: Why now? Is there a shortfall in what is currently in use with respect to secured lending?

Chernuchin: Shortfall may not be quite the term to use, but a quick reading of the advanced sheets reveals that lawyers frequently make mistakes in documenting and structuring secured transactions. This is a specialized area and, of course, requires careful attention to detail. Mistakes lead to unnecessary litigation and losses. The revised forms book is designed to assist attorneys so that they will be less likely to make such mistakes.

The new edition, in addition to highlighting provisions in the forms that are regularly negotiated, will provide an overview of other areas of law that the secured transactions attorney should be cognizant of, including the Federal Assignment of Claims Act, Cape Town, perfection of IP and collateral located in foreign jurisdictions, and more.

Editor: Would you give our readers an example of the types of form that will be available in the second edition?

Chernuchin: The forms that appear in the second edition are meant to cover the areas that the secured lending transaction attorney is most likely to encounter in his or her day-to-day practice. The forms will highlight practical information. For example, the security agreement will (among other things) suggest limitation of covenants to actions that are required for the grant and perfection of a security interest in certain collateral and adequate time to comply with such covenants.

Editor: The form book is a private practitioner's guide to getting things right? What is its circulation?

Chernuchin: Essentially, yes, this is meant to be a private practitioner's guide. Unlike the first edition, the form book is directed to an audience consisting of a variety of practitioners in this area. The first edition was meant for new practitioners - young attorneys just getting into the area - and was not of substantial value to the seasoned practitioner. The second edition has considerably more depth, and while we believe it will be of great value to a newly admitted attorney, it will certainly be utilized by someone with considerable experience in the area as well.

Editor: As chair of the task force, one of your responsibilities is to serve as editor of the second edition. What does your work as editor entail?

Chernuchin: Much of what I will do as editor is an outgrowth of what I do in my practice daily. The new edition will feature a form of security agreement, for example, that will highlight for the practitioner all of the regularly negotiated provisions and draw the practitioner's attention to the problem areas, the pitfalls, the minor quirks that, if not attended to, might become real issues.

While I will draft the documents that reflect my practice, I will need to call upon experts from other areas for commentary and the drafting of forms that I do not regularly use in my practice. Others will need to review that work as well as my work. Before the second edition is actually published it will have been reviewed by many Article 9 experts (including the drafters of the [not so new] Article 9).

Editor: You indicated that the first edition was an introduction and helpful to new practitioners. Has this edition outlived its useful life?

Chernuchin: No, I do not think the first edition has outlived its useful life. The chapters that deal with the transition rules concerning the Article 9 revisions are, of course, no longer necessary, but the standard forms that the book includes will continue to be helpful to an attorney just starting out in this area.

Editor: How do you anticipate the reception of the second edition by practitioners?

Chernuchin: We hope that it will be a best seller by ABA standards.

Editor: Where can our readers learn more about the second edition?

Chernuchin: The ABA website, www.abanet.org, has information about the Business Law Section, including our work on the second edition. Once the book is published it will be available on the ABA website.

Please email the interviewee at cchernuchin@willkie.com with questions about this interview.