To Amend Article 9 Of The Uniform Commercial Code.
Summary
HB1736 amends Article 9 of the Arkansas Uniform Commercial Code, which governs secured transactions. The bill revises provisions dealing with when contractual or legal restrictions are ineffective against the creation, attachment, perfection, or enforcement of security interests. In general, it strengthens the ability of a secured party to take an interest in certain payment rights and intangibles even when a contract, statute, or regulation says assignment or transfer is restricted or requires consent.
The bill updates Arkansas Code §§ 4-9-406 and 4-9-408 to clarify that anti-assignment clauses and similar legal restrictions are ineffective in many cases involving accounts, chattel paper, payment intangibles, promissory notes, health-care-insurance receivables, and general intangibles. It also adds explicit exceptions stating that these rules do not apply to security interests in ownership interests in general partnerships, limited partnerships, or limited liability companies. In practical terms, the measure is aimed at improving the enforceability of secured lending and collateralization rules while preserving special treatment for partnership and LLC ownership interests.
Impact
HB1736 changes state commercial law by narrowing the effect of contractual and statutory anti-assignment restrictions under the UCC. It affects lenders, borrowers, account debtors, and parties dealing in receivables, promissory notes, licenses, contracts, and other general intangibles by making it easier to create and perfect security interests in those assets. The bill also preserves an exception for ownership interests in general partnerships, limited partnerships, and limited liability companies, meaning those interests remain outside the expanded anti-restriction rules.
Sentiment
The available voting history suggests strong, bipartisan support for the bill. It passed the House 95-0 and the Senate 33-0, indicating no recorded opposition on final passage. No committee transcript was provided, but the unanimous votes imply the measure was viewed as a technical commercial-law update rather than a controversial policy change.
Contention
No major contention is evident in the available record. The only notable policy boundary in the text is the express exclusion of security interests in ownership interests of general partnerships, limited partnerships, and limited liability companies from the bill’s anti-restriction rules. That carveout suggests the legislature wanted to expand secured-transaction flexibility without altering the treatment of entity ownership interests, but there is no indication from the votes or record that this point was disputed.
Property: recording; marketable record title act; revise. Amends title & secs. 1, 1a, 2, 3, 4, 5, 6 & 8 of 1945 PA 200 (MCL 565.101 et seq.) & adds sec. 5a.