Sec. 18-107. Security interests in intangible transition property and grantee instruments.

892 words·~4 min read·/il/chapter-220/act-5/18-107

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(a)Notwithstanding any other provision of law, neither intangible transition property, grantee instruments nor any right, title or interest therein, shall constitute property in which a security interest may be created under the Uniform Commercial Code nor shall any such rights be deemed proceeds of any property which is not intangible transition property or grantee instruments, as the case may be. For purposes of the foregoing, the terms "account", "general intangible", "instrument", and "payment intangible" (as defined under Section 9-102 of the Uniform Commercial Code) shall, as used in the Uniform Commercial Code, be deemed to exclude any such intangible transition property, grantee instruments or any right, title, or interest therein.

(b)The granting, perfection and enforcement of security interests in intangible transition property or grantee instruments are governed by this Section rather than by Article 9 of the Uniform Commercial Code.

(c)A valid and enforceable security interest in intangible transition property and in grantee instruments shall attach and be perfected only by the means set forth below in this subsection

(c)of Section 18-107:

(1)To the extent transitional funding instruments or grantee instruments are purported

to be secured by intangible transition property or to the extent transitional funding instruments are purported to be secured by grantee instruments, as the case may be, as specified in the applicable transitional funding order, the lien of the transitional funding instruments and grantee instruments, if any, shall attach automatically to such intangible transition property and grantee instruments, if any, from the time of issuance of the transitional funding instruments and grantee instruments, if any.

Such lien shall be a valid and enforceable security interest in the intangible transition property or the grantee instruments, as the case may be, securing the transitional funding instruments and grantee instruments, if any, and shall be continuously perfected if, before the date of issuance of the applicable transitional funding instruments or grantee instruments, if any, or within no more than 10 days thereafter, a filing has been made by or on behalf of the holder with the Chief Clerk of the Commission stating that such transitional funding instruments or grantee instruments, if any, have been issued.

Any such filing made with the Commission in respect to such transitional funding instruments or grantee instruments shall take precedence over any subsequent filing except as may otherwise be provided in the applicable transitional funding order.

(2)The liens under subparagraph

(1)are enforceable against the electric utility, any

assignee, grantee or issuer, and all third parties, including judicial lien creditors, subject only to the rights of any third parties holding security interests in the intangible transition property or grantee instruments previously perfected in the manner described in this subsection if value has been given by the purchasers of transitional funding instruments or grantee instruments. A perfected lien in intangible transition property and grantee instruments, if any, is a continuously perfected security interest in all then existing or thereafter arising revenues and proceeds arising with respect to the associated intangible transition property or grantee instruments, as the case may be, whether or not the electric power and energy included in the calculation of such revenues and proceeds have been provided.

The lien created under this subsection is perfected and ranks prior to any other lien, including any judicial lien, which subsequently attaches to the intangible transition property or grantee instruments, as the case may be, and to any other rights created by the transitional funding order or any revenues or proceeds of the foregoing. The relative priority of a lien created under this subsection is not defeated or adversely affected by changes to the transitional funding order or to the instrument funding charges payable by any retail customer, class of retail customers or other person or group of persons obligated to pay such charges.

(3)The relative priority of a lien created under this subsection is not defeated or

adversely affected by the commingling of revenues arising with respect to intangible transition property or grantee instruments with funds of the electric utility or other funds of the assignee, issuer or grantee.

(4)If an event of default occurs under transitional funding instruments or grantee

instruments, the holders thereof or their authorized representatives, as secured parties, may foreclose or otherwise enforce the lien in the grantee instruments or in the intangible transition property securing the transitional funding instruments or grantee instruments, as applicable, subject to the rights of any third parties holding prior security interests in the intangible transition property or grantee instruments previously perfected in the manner provided in this subsection.

Upon application by the holders or their authorized representatives, without limiting their other remedies, the Commission shall order the sequestration and payment to the holders or their authorized representatives of revenues arising with respect to the intangible transition property or grantee instruments pledged to the holders. An order under this subsection shall remain in full force and effect notwithstanding any bankruptcy, reorganization, or other insolvency proceedings with respect to the electric utility, grantee, assignee or issuer.

(5)The Commission shall maintain segregated records which reflect the date and time of

receipt of all filings made under this subsection. The Commission may provide that transfers of intangible transition property or of grantee instruments be filed in accordance with the same system.