Document Type


Publication Date

Winter 1984


The widespread adoption of article 9 of the Uniform Commercial Code in the 1950s and 1960s resulted in an ‘uncertain correlation’ between state personal property security law and the Bankruptcy Act of 1898. Although the Bankruptcy Act of 1898 frequently relied upon existing state law to determine the validity of a secured creditor's interest in the personal property of a bankruptcy debtor, its provisions were more compatible with pre-Code personal property security law. As a result, courts often struggled to reconcile the meanings of the two statutes.

The enactment of the Bankruptcy Reform Act of 1978 held out the promise of greater correspondence between the concepts of bankruptcy law and those of article 9. The Commission on the Bankruptcy Laws of the United States, established in 1970 to study the Bankruptcy Act of 1898, relied heavily on the work of practitioners and scholars familiar with article 9. The statutory revision proposed by the Commission in 1973 embodied many recommendations made by these practitioners and scholars, and served as an important foundation for the Bankruptcy Reform Act.

Although the Bankruptcy Reform Act employs concepts drawn from article 9, some incongruities between the two statutes remain. For example, under the provisions of article 9, a secured party may, in certain circumstances, delay perfection of a security interest without sacrificing priority to other parties whose claims to the secured collateral arise before the security interest is perfected. If perfection is about to expire or lapse, article 9 requires the secured party to continue the perfection of the security interest in order to retain priority over others who may claim an interest in the collateral. The Bankruptcy Reform Act of 1978 also makes delayed perfection of security interests in personal property effective against the trustee in bankruptcy, but the Reform Act authorizes delayed perfection in cases in which article 9 does not. In addition, the Reform Act does not expressly sanction continuation of perfection after bankruptcy proceedings have been instituted.

This article explores some of the uncertainties in the relationship between the Bankruptcy Reform Act and article 9. It first describes and evaluates the article 9 provisions dealing with delayed and continued perfection. Against this background, the article examines the relationship of delayed and continued perfection, under both the Reform Act and article 9, to the bankruptcy trustee's avoiding powers. Finally, some suggestions for legislative changes in the Reform Act are offered.