Arkansas Code of 1987 (2023) › Title 4 - BUSINESS AND COMMERCIAL LAW (§§ 4-1-101 — 4-119-105) › Subtitle 1 - UNIFORM COMMERCIAL CODE (§§ 4-1-101 — 4-11-106) › Chapter 9 - SECURED TRANSACTIONS (§§ 4-9-101 — 4-9-809) › Part 6 - DEFAULT (§§ 4-9-601 — 4-9-628) › 1 - DEFAULT AND ENFORCEMENT OF SECURITY INTEREST (§§ 4-9-601 — 4-9-624) › Section 4-9-620 - Acceptance of collateral in full or partial satisfaction of obligation - Compulsory disposition of collateral

(a)
Except as otherwise provided in subsection (g), a secured party may accept collateral in full or partial satisfaction of the obligation it secures only if:
(1)
the debtor consents to the acceptance under subsection (c);
(2)
the secured party does not receive, within the time set forth in subsection (d), a notification of objection to the proposal authenticated by:
(A)
a person to which the secured party was required to send a proposal under §
4-9-621
; or
(B)
any other person, other than the debtor, holding an interest in the collateral subordinate to the security interest that is the subject of the proposal;
(3)
if the collateral is consumer goods, the collateral is not in the possession of the debtor when the debtor consents to the acceptance; and
(4)
subsection (e) does not require the secured party to dispose of the collateral or the debtor waives the requirement pursuant to §
4-9-624
.
(b)
A purported or apparent acceptance of collateral under this section is ineffective unless:
(1)
the secured party consents to the acceptance in an authenticated record or sends a proposal to the debtor; and
(2)
the conditions of subsection (a) are met.
(c)
For purposes of this section:
(1)
a debtor consents to an acceptance of collateral in partial satisfaction of the obligation it secures only if the debtor agrees to the terms of the acceptance in a record authenticated after default; and
(2)
a debtor consents to an acceptance of collateral in full satisfaction of the obligation it secures only if the debtor agrees to the terms of the acceptance in a record authenticated after default or the secured party:
(A)
sends to the debtor after default a proposal that is unconditional or subject only to a condition that collateral not in the possession of the secured party be preserved or maintained;
(B)
in the proposal, proposes to accept collateral in full satisfaction of the obligation it secures; and
(C)
does not receive a notification of objection authenticated by the debtor within twenty (20) days after the proposal is sent.
(d)
To be effective under subsection (a)(2), a notification of objection must be received by the secured party:
(1)
in the case of a person to which the proposal was sent pursuant to §
4-9-621
, within twenty (20) days after notification was sent to that person; and
(2)
in other cases:
(A)
within twenty (20) days after the last notification was sent pursuant to §
4-9-621
; or
(B)
if a notification was not sent, before the debtor consents to the acceptance under subsection (c).
(e)
A secured party that has taken possession of collateral shall dispose of the collateral pursuant to §
4-9-610
within the time specified in subsection (f) if:
(1)
sixty percent (60%) of the cash price has been paid in the case of a purchase-money security interest in consumer goods; or
(2)
sixty percent (60%) of the principal amount of the obligation secured has been paid in the case of a non-purchase-money security interest in consumer goods.
(f)
To comply with subsection (e), the secured party shall dispose of the collateral:
(1)
within ninety (90) days after taking possession; or
(2)
within any longer period to which the debtor and all secondary obligors have agreed in an agreement to that effect entered into and authenticated after default.
(g)
In a consumer transaction, a secured party may not accept collateral in partial satisfaction of the obligation it secures.
Acts 2001, No. 1439, § 1.