Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Commercial Law topic
No spam. Unsubscribe anytime.
Debate over UCC Article 8 changes ends with defeat in subcommittee
Summary
HB2611, which would change priority rules under UCC Article 8 and allow certain suits to be brought in Tennessee, failed in subcommittee after testimony from both proponents who warned investor assets can be vulnerable in intermediary insolvency and banking groups who cautioned the change could disrupt clearing and electronic trading.
House Bill 2611, presented by Chairman Halsey, would revise Uniform Commercial Code (UCC) Article 8 provisions that the sponsor said currently allow creditors with control over a financial asset to have priority over entitlement holders in insolvency, and would permit investors to sue from Tennessee instead of New York in many cases.
"You're told that you have property rights, but you have no right to recover your property in the event of insolvency of an intermediary," Chairman Halsey said, urging the committee to change who has priority in a meltdown. Witness Andrew Winnett, a retirement‑planning firm owner, said investors are vulnerable and urged members to "vote in the best interests of the people who elected you." Banking witnesses, including Amy Hazlett of the Tennessee Bankers Association, disputed the sponsors' characterization and warned that narrow exceptions in Article 8 preserve investor protections and enable electronic clearing and settlement.
Legal staff told members that the proposed changes would generally apply going forward and would not retroactively impair existing contracts, but that contracting and jurisdictional questions remain. The clerk recorded 2 ayes and 5 nos; HB2611 failed to move on.
