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286.3-874 Rights of receiver under participation agreements.
The granting of a participation in a loan or other asset shall, unless otherwise
expressly so stated in the participation agreement or certificate, constitute a sale and
assignment of, and transfer of ownership in, a proportionate interest in the loan or
other asset and in all security interests, guaranties, and other rights granted under
the loan agreement, the note, and all documents of any nature related to the loan or
other asset, whether such documents are contemporaneously or thereafter
executed. The perfection of a security interest in personal property or the filing of a
lien on real property by the selling bank shall be deemed perfection or filing on
behalf of each participant, whether or not such participant shall be a participant at
the time of such perfection or filing. Upon the closing of a bank under KRS
286.3-854, the receivership estate shall have no interest in such proportionate
interests in the loan or other asset, or in any security therefor or any rights therein,
therefore, sold a participant, such rights passing, to the extent such rights have not
previously passed to the participant without further action on the part of the selling
bank or participant. The receiver shall have no greater rights under any participation
agreement than did the closed bank immediately prior to its closing.
Effective:July 13, 1984
History: Created 1984 Ky. Acts ch. 324, sec. 53, effective July 13, 1984.
Formerly codified as KRS 287.874.
Legislative Research Commission Note (7/12/2006). In accordance with 2006
Ky. Acts ch. 247, secs. 38 and 39, this statute has been renumbered as a
section of the Kentucky Financial Services Code, KRS Chapter 286, and KRS
references within this statute have been adjusted to conform with the 2006
renumbering of that code.
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