Lessons from Delaware: Navigating the 2018 Amendments to Sections 9-406 and 9-408 of Article 9 of the Uniform Commercial Code
February 2020
Publication
Since 2001, Sections 9-406 and 9-408 of Article 9 of the Uniform Commercial Code (“UCC”) have contained provisions that void certain restrictions against assignability. Interestingly, in 2002, the State of Delaware approved amendments ( the “Delaware Amendments”) to Sections 9-406 and 9-408 of the version of the UCC enacted in Delaware (the “Delaware UCC”) which, in part, provided that the restrictions against assignability do not apply to “an interest in a partnership or limited liability company.” At its July 2018 annual meeting, the Uniform Law Commission enacted amendments to Article 9 of the UCC4 modifying the “antiassignment override” provisions, thereby aligning the UCC with the Delaware UCC by excluding partnership and limited liability company interests from the override provisions. The amendments to the anti-assignment override provisions of Sections 9-406 and 9-408 adopted by the Uniform Law Commission (the “2018 Amendments”) align the UCC with what has long been the case in the State of Delaware.