Should Software Financing Documentation Be Entitled to “Chattel Paper” Treatment Under the UCC?
The software financing documentation under the typical software financing program agreement will not constitute “chattel paper” under the current definition in Article 9 because there is no security interest in or lease of “goods.” Under the current draft of the proposed revisions to Article 9, this characterization would not change. Therefore, if there is an existing blanket lien or lien on general intangibles of the software company (or its captive finance company), the lessor will need to obtain a consent and release of lien. Should a Financier of Software Be Entitled to the Benefit of the “Purchase Money Security Interest” Rules Under the UCC? Even if the lessor takes a security interest in the nonexclusive software license (and obtains the software company.s consent to the security interest and obtains remarketing rights), under the current rules in Article 9, the lessor cannot obtain purchase money priority over other creditors of the licensee. This is so because the purchase mon
