Opinion ID: 2771725
Heading Depth: 2
Heading Rank: 3

Heading: The Delaware Supreme Court’s Answer

Text: In a speedy and thorough reply, the Delaware Supreme Court answered the certified question, explaining that if the secured party of record authorizes the filing of a UCC‐3 termination statement, then that filing is effective regardless of whether the secured party subjectively intends or understands the effect of that filing: 9 [F]or a termination statement to become effective under § 9‐509 and thus to have the effect specified in § 9‐513 of the Delaware UCC, it is enough that the secured party authorizes the filing to be made, which is all that § 9‐510 requires. The Delaware UCC contains no requirement that a secured party that authorizes a filing subjectively intends or otherwise understands the effect of the plain terms of its own filing. Official Comm. of Unsecured Creditors of Motors Liquidation Co., 2014 WL 5305937, at . That conclusion, explained the court, follows both from the unambiguous terms of the UCC and from sound policy considerations: JPMorgan’s argument that a filing is only effective if the authorizing party understands the filing’s substantive terms and intends their effect is contrary to § 9‐509, which only requires that “the secured party of record authorize[ ] the filing.” . . . Even if the statute were ambiguous, we would be reluctant to embrace JPMorgan’s proposition. Before a secured party authorizes the filing of a termination statement, it ought to review the statement carefully and understand which security interests it is releasing and why. . . . If parties could be relieved from the legal consequences of their mistaken filings, they would have little incentive to ensure the accuracy of the information contained in their UCC filings. Id. at –4 (first alteration in original) (footnote omitted).