TITLE 28

COMMERCIAL TRANSACTIONS

CHAPTER 9

SECURED TRANSACTIONS

PART 6.

DEFAULT

28-9-620.  Acceptance of collateral in full or partial satisfaction of obligation — Compulsory disposition of collateral. (a) A secured party may accept collateral in full or partial satisfaction of the obligation it secures only if:

(1)  The debtor consents to the acceptance under subsection (c) of this section;

(2)  The secured party does not receive, within the time set forth in subsection (d) of this section, a notification of objection to the proposal authenticated by:

(A)  a person to which the secured party was required to send a proposal under section 28-9-621; or

(B)  any other person, other than the debtor, holding an interest in the collateral subordinate to the security interest that is the subject of the proposal; and

(3)  Subsection (e) of this section does not require the secured party to dispose of the collateral or the debtor waives the requirement pursuant to section 28-9-624.

(b)  A purported or apparent acceptance of collateral under this section is ineffective unless:

(1)  The secured party consents to the acceptance in an authenticated record or sends a proposal to the debtor; and

(2)  The conditions of subsection (a) of this section are met.

(c)  For purposes of this section:

(1)  A debtor consents to an acceptance of collateral in partial satisfaction of the obligation it secures only if the debtor agrees to the terms of the acceptance in a record authenticated after default; and

(2)  A debtor consents to an acceptance of collateral in full satisfaction of the obligation it secures only if the debtor agrees to the terms of the acceptance in a record authenticated after default or the secured party:

(A)  sends to the debtor after default a proposal that is unconditional or subject only to a condition that collateral not in the possession of the secured party be preserved or maintained;

(B)  in the proposal, proposes to accept collateral in full satisfaction of the obligation it secures; and

(C)  does not receive a notification of objection authenticated by the debtor within twenty (20) days after the proposal is sent.

(d)  To be effective under subsection (a)(2) of this section, a notification of objection must be received by the secured party:

(1)  In the case of a person to which the proposal was sent pursuant to section 28-9-621, within twenty (20) days after notification was sent to that person; and

(2)  In other cases:

(A)  within twenty (20) days after the last notification was sent pursuant to section 28-9-621; or

(B)  if a notification was not sent, before the debtor consents to the acceptance under subsection (c) of this section.

(e)  A secured party that has taken possession of collateral shall dispose of the collateral pursuant to section 28-9-610 within the time specified in subsection (f) of this section if:

(1)  Sixty percent (60%) of the cash price has been paid in the case of a purchase-money security interest in consumer goods; or

(2)  Sixty percent (60%) of the principal amount of the obligation secured has been paid in the case of a nonpurchase-money security interest in consumer goods.

(f)  To comply with subsection (e) of this section, the secured party shall dispose of the collateral:

(1)  Within ninety (90) days after taking possession; or

(2)  Within any longer period to which the debtor and all secondary obligors have agreed in an agreement to that effect entered into and authenticated after default.

History:

[28-9-620, added 2001, ch. 208, sec. 2, p. 792.]