[uptowngirl549]

NINJA Question –

I am a bit confused by the answer to the below question:

Burn Manufacturing borrowed $500,000 from Howard Finance Co., secured by Burn’s present and future inventory, accounts receivable, and the proceeds thereof. The parties signed a financing statement that described the collateral and it was filed in the appropriate state office. Burn subsequently defaulted in the repayment of the loan and Howard attempted to enforce its security interest. Burn contended that Howard’s security interest was unenforceable. In addition, Green, who subsequently gave credit to Burn without knowledge of Howard’s security interest, is also attempting to defeat Howard’s alleged security interest. The security interest in question is valid with respect to:

A. both Burn and Green.

B. neither Burn nor Green.

C. Burn but not Green.

D. Green but not Burn.

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The answer says that it is “A”. I would think that it would be valid to Howard and Green, so I picked D. Or is the question asking whether or not there is a security interest in Burn?

FAR - 78
AUD - 66, 91
REG - August 28, 2014
BEC - 74, 79

[uptowngirl549]

Anyone?

FAR - 78
AUD - 66, 91
REG - August 28, 2014
BEC - 74, 79

[Author]

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