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Regular Session, 2010
SENATE BILL NO. 256
BY SENATOR CHAISSON
COMMERCIAL REGULATIONS. Enacts the Louisiana Exchange Sale of Receivables Act.
(gov sig)
AN ACT1
To enact Part IV of Chapter 4 of Code Title VII of Code Book II Title 9 of the Louisiana2
Revised Statutes of 1950, to be comprised of R.S. 9:3131.1 through 3131.9, relative3
to the Louisiana Exchange Sale of Receivables Act; to provide for legislative intent;4
to provide for definitions; to provide for the scope; to provide that the true sale status5
of sales of receivables over exchanges located in Louisiana; to provide for the6
binding effectiveness of Louisiana law to such sales of receivables; to provide for7
buyer ownership rights; to provide for relationship with the Uniform Commercial8
Code; to provide for agreements; and to provide for related matters.9
Be it enacted by the Legislature of Louisiana:10
Section 1. Part IV of Chapter 4 of Code Title VII of Code Book II Title 9 of the11
Louisiana Revised Statutes of 1950, comprised of R.S. 9:3131.1 through 3131.9, is hereby12
enacted to read as follows:13
PART IV. LOUISIANA EXCHANGE SALE OF RECEIVABLES ACT14
§3131.1. Short title15
This Part shall be known and may be cited as the "Louisiana Exchange16
Sale of Receivables Act."17 SB NO. 256
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§3131.2. Legislative intent1
A. It is the intent of the legislature to encourage and promote businesses2
to offer sellers the ability to sell their receivables to qualified buyers over3
electronic and other types of exchanges located in this state, thereby availing4
themselves of Louisiana civil law principles not found in common law5
jurisdictions, and further availing themselves of the true sale provisions of this6
Part and R.S. 10:9-109(e).7
B. The legislature declares the following actions to be the public policy8
of this state.9
(1) All sales of receivables over exchanges located in Louisiana shall be10
subject to Louisiana law, and specifically subject to this Part and to R.S. 10:9-11
109(e).12
(2) Such sales shall result in true sales for all purposes and not be limited13
to a bankruptcy context.14
(3) Such sales shall not be subject to recharacterization as a simulated15
sale or as a loan, extension of credit, or other credit accommodation by the16
buyer to the seller, notwithstanding that the seller may be obligated to17
repurchase the receivable, or the buyer may have other recourse against the18
seller, if the receivable is not timely paid, and further notwithstanding that the19
seller may be entitled to receive a portion of the collection proceeds.20
C. This Part and R.S. 10:9-109(e) specifically reject common law legal21
theories under which recourse sales of receivables have been recharacterized as22
loans or credit accommodations, as being contrary to Louisiana civil law23
principles that apply to sales of receivables over exchanges located in this state.24
§3131.3. Definitions25
A. For the purposes of this Part, the following terms shall have the26
following meanings unless the context clearly indicates otherwise.27
(1) "Buyer" means the person buying a receivable over an exchange28
located in this state.29 SB NO. 256
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(2) "Collection proceeds" means any amounts received or otherwise1
collected from the person owing the receivable, including the account debtor or2
a guarantor of the payment obligation.3
(3) "Consummate" means the completion of all agreements, steps and4
actions necessary for a sale of receivables to be deemed to be complete under5
Louisiana law, with ownership of the purchased receivable passing from the6
seller to the buyer.7
(4) "Exchange" means an electronic or other marketplace over which8
sellers may offer and sell their receivables to qualified buyers.9
(5) "Operational employees" means and refers to employees whose work10
responsibilities are primarily devoted to performing operations-related11
functions related to the exchange and persons transacting business over the12
exchange, as compared to employees whose primary work responsibilities are13
devoted to managerial, marketing, sales, internal accounting and other non-14
operational functions.15
(6) "Receivable" means an account, general intangible, payment16
intangible, chattel paper or instrument as defined under the UCC. Receivables17
shall also include third-party payment obligations that are not subject to the18
UCC. Receivables shall not be limited to United States domestic payment19
obligations, and shall include receivables owed by non-United States persons20
and entities as well as receivables originating out of non-United States21
transactions.22
(7) "Seller" means the person offering a receivable for sale over an23
exchange located in this state.24
(8) "True sale" means a consummated sale of all rights, title and25
interests that the seller may have in a receivable sold over an exchange located26
in this state, with the buyer acquiring all of the seller's rights and interests, and27
with the seller retaining no residual or equitable rights therein.28
(9) "UCC" means the Uniform Commercial Code of any state and the29 SB NO. 256
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comparable laws of foreign non-United States jurisdictions. In Louisiana,1
"UCC" means and refers to Chapter 9 of the Louisiana Uniform Commercial2
Code, R.S. 10:9-101, et seq.3
B. All terms used, but not defined in this Part, shall have the meanings4
found in the UCC, the Louisiana Revised Statutes of 1950, and the Louisiana5
Civil Code.6
§3131.4. Scope7
A. This Part shall apply to all sales of receivables over exchanges located8
in this state irrespective of whether the buyer or the seller of the receivable is9
a Louisiana resident, business organization or other entity, so long as the buyer10
and the seller contractually agree that such sales shall be deemed to be11
consummated in Louisiana subject to Louisiana law, and such sales of12
receivables result in true sales for all purposes.13
B. An exchange shall be conclusively deemed to be located in this state14
when the exchange is owned and operated by a Louisiana business organization15
having fifty percent or more of its operational employees located in this state,16
and such Louisiana business organization declares in an affidavit filed under17
oath in the conveyance office of the parish in which the organization has its18
principal place of business, that the affiant maintains its principal place of19
business in that parish. An exchange owner or operator located in this state20
may have additional sales and other offices, as well as managerial, sales,21
marketing, accounting and other operational and non-operational employees22
located in other jurisdictions, so long as the company has fifty percent or more23
of its operational employees in Louisiana. In the case of an electronic exchange24
conducting exchange business over the internet or other electronic media, the25
company's servers and electronic interchanges need not be physically located26
in Louisiana.27
§3131.5. True sales of receivables; not subject to recharacterization; simulation28
articles not applicable29 SB NO. 256
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A. All sales of receivables over exchanges located in this state shall1
conclusively result in consummated true sales for all purposes, and not be2
limited to a bankruptcy context, with the buyer acquiring all of the seller's3
rights, title and interests in and to the traded receivables and the collection4
proceeds thereof, and with the buyer retaining no vestiges of legal or equitable5
ownership whatsoever.6
B. As true sales, sales of receivables over exchanges located in this state7
shall not be subject to recharacterization as loans, extensions of credit, or other8
credit accommodations by the seller to the buyer, notwithstanding that the9
seller may be obligated to repurchase the receivable, or the buyer may10
otherwise have recourse against the seller if the receivable is not paid when due,11
and further notwithstanding that the seller may be entitled to receive a portion12
of the collection proceeds. Furthermore, sales of receivables over exchanges13
located in this state shall not be construed, under any circumstance, to be a14
simulated sale under the simulation articles of the Louisiana Civil Code.15
C. (1) The seller's written agreement in the underlying documents that16
the seller absolutely, unconditionally, and irrevocably intends that sales of the17
seller's receivables over an exchange located in this state result in true sales of18
such receivables for all purposes, shall be definitive and binding on the seller,19
and may not be subsequently disavowed, refuted or called into question by any20
of the following persons.21
(a) The seller.22
(b) The seller's successors or assigns, or any person acquiring rights23
from or through the seller, including the buyer.24
(c) Past and future owners, directors, officers, employees, agents,25
representatives and attorneys of the seller, or of its successors or assigns, or any26
person acquiring rights from or through the seller.27
(d) The account debtor or any other person obligated to pay the28
receivable.29 SB NO. 256
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(e) All other third persons.1
(2) Any person, including anyone listed in Subparagraph (1) of this2
Paragraph, attempting to recharacterize a sale of a receivable over an exchange3
located in this state as anything other than a true sale under Louisiana law, shall4
be personally liable and obligated by operation of law to reimburse the buyer5
and the buyer's agents for attorney fees, court costs, arbitration costs, expert6
fees, and out-of-pocket expenses, including but not limited to travel expenses,7
expended in defense of the status of such sale as a true sale under Louisiana law.8
§3131.6. Binding effectiveness of Louisiana law9
A. Louisiana law, and specifically this Part and R.S. 10:9-109(e), shall10
apply to all sales of receivables over exchanges located in this state irrespective11
of the domicile or other location of the buyer or the seller.12
B. (1) The seller's written agreement and choice of law covenant in the13
underlying documents that Louisiana law shall apply to all sales of the seller's14
receivables over an exchange located in this state, shall be definitive for all15
purposes, and shall be absolutely, unconditionally and irrevocably binding on16
the seller, and shall not be subsequently disavowed, refuted, or called into17
question by any of the following persons.18
(a) The seller.19
(b) The seller's successors or assigns, or anyone acquiring rights from or20
through the seller, including the buyer.21
(c) Past and future owners, directors, officers, employees, agents,22
representatives and attorneys of the seller, or of its successors or assigns, or23
anyone acquiring rights from or through the seller.24
(d) The account debtor or person obligated to pay the receivable.25
(e) All other third persons.26
(2) Any person, including anyone listed in Subparagraph (1) of this27
Paragraph, attempting to contest the applicability of Louisiana law and to apply28
the laws of another state or jurisdiction to the sale of the seller's receivables29 SB NO. 256
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over an exchange located in this state, shall be personally liable and obligated1
by operation of law to reimburse the buyer and the buyer's agents for all2
attorney fees, court costs, arbitration costs, expert fees, and out-of-pocket3
expenses, including but not limited to travel expenses expended in defense of the4
status of such a sale as a true sale under Louisiana law.5
C. For the further purpose of applying relevant conflicts of law6
principles, the legislature declares that Louisiana public policy shall be most7
seriously impaired to the extent that the laws of another state or jurisdiction8
might be applied to sales of receivables over exchanges located in Louisiana. 9
As sales of receivables take place in Louisiana over Louisiana based exchanges,10
Louisiana shall be deemed to have the most significant contact with the11
underlying sales transaction.12
§3131.7. Buyer ownership rights; evidence of ownership13
A. The buyer shall be deemed for all purposes, and not be limited to a14
bankruptcy context, to be the owner of a receivable purchased over an exchange15
located in this state, with the buyer having the right to all of the following16
actions.17
(1) To collect the receivable from the account debtor or other obligated18
person.19
(2) To resell the receivable to a subsequent buyer.20
(3) To pledge or otherwise grant a security interest in the receivable in21
favor of the buyer's creditor.22
(4) To reflect the receivable as an asset on the buyer's books and records.23
B. To the extent that the owner or operator of an exchange located in24
this state maintains records of sales of receivables over the exchange, such25
records shall serve as the single authoritative record evidencing buyer26
ownership of traded receivables for all purposes.27
§3131.8. Relationship to the UCC28
A. This Part supplements R.S. 10:9-109(e), and shall not be construed29 SB NO. 256
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to amend or impliedly repeal the provisions thereof.1
B. This Part and R.S. 10:9-109(e) shall not be construed to conflict with,2
and shall not displace any of the following existing laws.3
(1) The filing perfection requirements of the R.S. 10:9-301, 9-307, 9-4
310(a), 9-312(a), and 9-501 requiring that the buyer file a UCC financing5
statement in the required location in the seller's jurisdiction of organization, or6
in the District of Columbia as applicable, to place third persons on notice that7
the buyer is or may be purchasing the seller's receivables.8
(2) The priority provisions of R.S. 10:9-317, and 9-319 through 9-339.9
(3) The account debtor notification provisions of R.S. 10:9-406 and 9-10
607(a)(1).11
C. This Part and R.S. 10:9-109(e) provide for and define the true sale12
status and the state property ownership rights of buyers of receivables13
purchased over exchanges located in this state, and shall not independently14
provide for rules governing perfection, the effects of perfection or15
nonperfection, or the priority rights of buyers of receivables purchased over16
Louisiana based exchanges within the context of R.S. 10:9-301.17
§3131.9. Agreements to be in writing18
A seller shall not maintain an action or have any claim against an owner19
or operator of an exchange located in this state, or against a buyer of the seller's20
receivables, unless the agreement is in writing, sets forth the relevant terms and21
conditions, and is signed by the seller and the owner/operator on its own behalf22
and as agent for the buyer.23
Section 2. This Act shall become effective upon signature by the governor or, if not24
signed by the governor, upon expiration of the time for bills to become law without signature25
by the governor, as provided by Article III, Section 18 of the Constitution of Louisiana. If26
vetoed by the governor and subsequently approved by the legislature, this Act shall become27
effective on the day following such approval.28 SB NO. 256
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The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Alan Miller.
DIGEST
Present law protects purchasers of accounts, chattel paper, payment intangibles, or
promissory notes by providing a notice filing system.
Present law provides that in the absence of fraud or intentional misrepresentation, the parties
characterization of a sale of accounts, chattel paper, payment intangibles, or promissory
notes is conclusive that the transaction is a true sale, and not a secured transaction.
Proposed law retains present law.
Proposed law provides for legislative intent that specifically rejects common law legal
theories under which recourse sales of receivables can be recharacterized as loans or credit
accommodations, as being contrary to La. civil law principles that apply to sales of
receivables over exchanges located in La.
Proposed law defines an "exchange" as an electronic or other marketplace over which sellers
may offer and sell their receivables to qualified buyers.
Proposed law applies to all sales of receivables over exchanges located in La., irrespective
of whether the buyer or the seller of the receivable is a La. resident, business organization
or other entity, so long as the buyer and the seller contractually agree that such sales are
deemed to be consummated in La., subject to La. law, and such sales of receivables result
in true sales for all purposes.
Proposed law deems conclusively that an exchange is located in La. when the exchange is
owned and operated by a La. business organization having 50% or more of its operational
employees located in La., and that the La. business organization declares in an affidavit filed
under oath in the conveyance office of the parish in which the organization has its principal
place of business, that the affiant maintains its principal place of business in that parish.
Proposed law deems that all sales of receivables over exchanges located in La. conclusively
result in consummated true sales for all purposes, and are not limited to a bankruptcy
context.
Proposed law deems that sales of receivables over exchanges located in La. are not subject
to recharacterization.
Proposed law deems that sales of receivables, as evidenced by the seller's written agreement,
over exchanges located in La. are binding on the seller.
Proposed law provides that any person attempting to recharacterize a sale of a receivable
over an exchange located in La. as anything other than a true sale is personally liable and
obligated to reimburse the buyer for costs expended in defense of the status of the sale as a
true sale.
Proposed law applies to all sales of receivables over exchanges located in La., irrespective
of the domicile or other location of the buyer or the seller.
Proposed law provides that the buyer is deemed to be the owner of the purchased receivable,
and has the right to all of the following actions:
(1)To collect the receivable from the account debtor or other obligated person; SB NO. 256
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(2) To resell the receivable to a subsequent buyer;
(3) To pledge or otherwise grant a security interest in the receivable in favor of the
buyer's creditor; and
(4)To reflect the receivable as an asset on the buyer's books and records.
Proposed law is deemed to supplement and not to conflict with pertinent provisions of the
UCC.
Proposed law requires that agreements regarding sales of receivables over exchanges located
in La. be in writing.
Effective upon signature of the governor or lapse of time for gubernatorial action.
(Adds R.S. 9:3131.1-3131.9)