2006 New York Code - Application Of Proceeds Of Disposition; Liability For Deficiency And Right To Surplus

 
  Section 9--615. Application  of  Proceeds  of Disposition; Liability for
                    Deficiency and Right to Surplus.
    (a) Application of proceeds. A secured party shall apply or  pay  over
  for application the cash proceeds of disposition under Section 9--610 in
  the following order to:
         (1) the  reasonable  expenses of retaking, holding, preparing for
             disposition, processing, and disposing, and,  to  the  extent
             provided   for  by  agreement  and  not  prohibited  by  law,
             reasonable attorney's fees and legal expenses incurred by the
             secured party;
         (1-a) in  the  case  of  a  cooperative   organization   security
             interest, the holder thereof in the amount secured thereby;
         (2) the  satisfaction  of  obligations  secured  by  the security
             interest or agricultural lien under which the disposition  is
             made;
         (3) the  satisfaction  of  obligations secured by any subordinate
             security  interest  in  or  other  subordinate  lien  on  the
             collateral if:
             (A) the  secured  party  receives  from  the  holder  of  the
                 subordinate  security   interest   or   other   lien   an
                 authenticated  demand for proceeds before distribution of
                 the proceeds is completed; and
             (B) in a case in which a consignor has  an  interest  in  the
                 collateral,  the  subordinate  security interest or other
                 lien is senior to the interest of the consignor; and
         (4) a secured party that is a consignor of the collateral if  the
             secured  party  receives  from the consignor an authenticated
             demand for proceeds before distribution of  the  proceeds  is
             completed.
    (b) Proof  of subordinate interest. If requested by a secured party, a
  holder of a subordinate security interest or other  lien  shall  furnish
  reasonable  proof  of  the  interest  or  lien within a reasonable time.
  Unless the holder does so, the secured party need not  comply  with  the
  holder's demand under subsection (a) (3).
    (c) Application of noncash proceeds. A secured party need not apply or
  pay  over  for application noncash proceeds of disposition under Section
  9--610 unless the failure to do so would be commercially unreasonable. A
  secured party that applies or pays over for application noncash proceeds
  shall do so in a commercially reasonable manner.
    (d) Surplus or deficiency  if  obligation  secured.  If  the  security
  interest   under   which  a  disposition  is  made  secures  payment  or
  performance of an obligation, after making the payments and applications
  required by subsection (a) and permitted by subsection (c):
         (1) unless subsection (a)(4) requires the secured party to  apply
             or  pay  over cash proceeds to a consignor, the secured party
             shall account to and pay a debtor for any surplus; and
         (2) the obligor is liable for any deficiency.
    (e) No surplus or deficiency in sales of certain rights to payment. If
  the underlying transaction is a sale of accounts, chattel paper, payment
  intangibles, or promissory notes:
         (1) the debtor is not entitled to any surplus; and
         (2) the obligor is not liable for any deficiency.
    (f) Calculation of surplus or  deficiency  in  disposition  to  person
  related  to  secured  party.  The  surplus  or  deficiency  following  a
  disposition is calculated based on the amount  of  proceeds  that  would
  have  been  realized  in  a  disposition  complying  with this part to a
  transferee other than the secured party, a person related to the secured
  party, or a secondary obligor if:
         (1) the transferee in the disposition is  the  secured  party,  a
             person  related to the secured party, or a secondary obligor;
             and
         (2) the  amount  of  proceeds of the disposition is significantly
             below the range of proceeds that a complying disposition to a
             person other than the secured party, a person related to  the
             secured party, or a secondary obligor would have brought.
    (g) Cash  proceeds  received  by junior secured party. A secured party
  that receives cash proceeds of a disposition in good faith  and  without
  knowledge  that  the  receipt  violates  the  rights  of the holder of a
  security interest or other lien that is not subordinate to the  security
  interest or agricultural lien under which the disposition is made:
         (1) takes  the  cash  proceeds  free  of the security interest or
             other lien;
         (2) is not obligated to apply the proceeds of the disposition  to
             the  satisfaction  of  obligations  secured  by  the security
             interest or other lien; and
         (3) is not obligated to account to  or  pay  the  holder  of  the
             security interest or other lien for any surplus.