Court Finds Mistaken Filing Terminates Security Interest Securing $1.5 Billion Loan

February 6, 2015

Client Alert
As discussed in our previous client alert, Delaware Supreme Court Rules that a Mistaken Filing Can Terminate Security Interest, litigation over whether $1.5 billion in prepetition loans to GM were secured or unsecured has been pending before the Second Circuit Court of Appeals. The Second Circuit recently issued a decision holding that although the secured party did not intend to terminate the security interest, the filing of a mistaken termination statement, where the secured party was provided copies of the mistaken termination statement and a checklist listing the filings to be terminated, was nevertheless effective to terminate the security interest.

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