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Regular Session, 2010 ENROLLED
SENATE BILL NO. 256
BY SENATOR CHAISSON
AN ACT1
To enact Part IV of Chapter 4 of Code Title VII of Code Book III of 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 for the true sale status5
of sales of receivables over exchanges located in Louisiana; to provide for the6
binding effectiveness of Louisiana law to the sales of receivables; to provide for7
buyer ownership rights; to provide for relationship with the Uniform Commercial8
Code; to prohibit the filing or maintaining of certain actions; and to provide for9
related matters.10
Be it enacted by the Legislature of Louisiana:11
Section 1. Part IV of Chapter 4 of Code Title VII of Code Book III of Title 9 of the12
Louisiana Revised Statutes of 1950, comprised of R.S. 9:3131.1 through 3131.9, is hereby13
enacted to read as follows:14
PART IV. LOUISIANA EXCHANGE SALE OF RECEIVABLES ACT15
§3131.1. Short title16
This Part shall be known and may be cited as the "Louisiana Exchange17
Sale of Receivables Act".18
§3131.2. Legislative intent19
A. It is the intent of the legislature to encourage and promote businesses20
to offer sellers the ability to sell their receivables to qualified buyers over21
electronic and other types of exchanges located in this state, thereby availing22
themselves of Louisiana civil law principles not found in common law23
jurisdictions, and further availing themselves of the true sale provisions of this24
Part and R.S. 10:9-109(e).25
B. The legislature declares the following actions to be the public policy26
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of this state.1
(1) All sales of receivables over exchanges located in Louisiana shall be2
subject to Louisiana law, and specifically subject to this Part and to R.S. 10:9-3
109(e).4
(2) Such sales shall result in true sales for all purposes and not be limited5
to a bankruptcy context.6
(3) Such sales shall not be subject to recharacterization as a simulated7
sale or as a loan, extension of credit, or other credit accommodation by the8
buyer to the seller, notwithstanding that the seller may be obligated to9
repurchase the receivable, or the buyer may have other recourse against the10
seller, if the receivable is not timely paid, and further notwithstanding that the11
seller may be entitled to receive a portion of the collection proceeds.12
C. This Part and R.S. 10:9-109(e) specifically reject common law legal13
theories under which recourse sales of receivables have been recharacterized as14
loans or credit accommodations, as being contrary to Louisiana civil law15
principles that apply to sales of receivables over exchanges located in this state.16
§3131.3. Definitions17
A. For the purposes of this Part, the following terms shall have the18
following meanings unless the context clearly indicates otherwise.19
(1) "Buyer" means the person buying a receivable over an exchange20
located in this state.21
(2) "Collection proceeds" means any amounts received or otherwise22
collected from the person owing the receivable, including the account debtor or23
a guarantor of the payment obligation.24
(3) "Consummate" means to complete all agreements, steps and actions25
necessary for a sale of receivables to be deemed to be complete under Louisiana26
law, with ownership of the purchased receivable passing from the seller to the27
buyer.28
(4) "Exchange" means an electronic or other marketplace over which29
sellers may offer and sell their receivables to qualified buyers.30 SB NO. 256 ENROLLED
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(5) "Operational employees" means and refers to employees whose work1
responsibilities are primarily devoted to performing operations-related2
functions related to the exchange and persons transacting business over the3
exchange, as compared to employees whose primary work responsibilities are4
devoted to managerial, marketing, sales, internal accounting and other non-5
operational functions.6
(6) "Receivable" means an account, general intangible, payment7
intangible, chattel paper or instrument as defined under the UCC. Receivables8
shall also include third-party payment obligations that are not subject to the9
UCC. Receivables shall not be limited to United States domestic payment10
obligations, and shall include receivables owed by non-United States persons11
and entities as well as receivables originating out of non-United States12
transactions.13
(7) "Seller" means the person offering a receivable for sale over an14
exchange located in this state.15
(8) "True sale" means a consummated sale of all rights, title and16
interests that the seller may have in a receivable sold over an exchange located17
in this state, with the buyer acquiring all of the seller's rights and interests, and18
with the seller not retaining a legal or equitable interest in the receivables sold.19
(9) "UCC" means the Uniform Commercial Code of any state and the20
comparable laws of foreign non-United States jurisdictions. In Louisiana,21
"UCC" means and refers to Chapter 9 of the Louisiana Uniform Commercial22
Code, R.S. 10:9-101, et seq.23
B. All terms used, but not defined in this Part, shall have the meanings24
found in the UCC, the Louisiana Revised Statutes of 1950, and the Civil Code.25
§3131.4. Scope26
A. This Part shall apply to all sales of receivables over exchanges located27
in this state irrespective of whether the buyer or the seller of the receivable is28
a Louisiana resident, business organization or other entity, provided that the29
buyer and the seller contractually agree that such sales shall be deemed to be30 SB NO. 256 ENROLLED
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consummated in Louisiana subject to Louisiana law, and contractually agree1
that the sales of receivables result in true sales for all purposes.2
B. An exchange shall be conclusively deemed to be located in this state3
when the exchange is owned and operated by a Louisiana business organization4
having fifty percent or more of its operational employees located in this state,5
and such Louisiana business organization declares in an affidavit filed in the6
conveyance office of the parish in which the organization has its principal place7
of business, that the affiant maintains its principal place of business in that8
parish. An exchange owner or operator located in this state may have9
additional sales and other offices, as well as managerial, sales, marketing,10
accounting and other operational and non-operational employees located in11
other jurisdictions, so long as the company has fifty percent or more of its12
operational employees in Louisiana. In the case of an electronic exchange13
conducting exchange business over the Internet or other electronic media, the14
servers and electronic interchanges of the company need not be physically15
located in Louisiana.16
§3131.5. True sales of receivables; not subject to recharacterization; simulation17
articles not applicable18
A. All sales of receivables over exchanges subject to the scope of this19
Part as provided by R.S. 9:3131.4(A) shall conclusively result in consummated20
true sales for all purposes, and not be limited to a bankruptcy context, with the21
buyer acquiring all of the seller's rights, title and interests in and to the traded22
receivables and the collection proceeds thereof, and with the seller retaining no23
vestiges of legal or equitable interest in the receivables sold.24
B. As true sales, sales of receivables over exchanges located in this state25
shall not be subject to recharacterization as loans, extensions of credit, or other26
credit accommodations by the seller to the buyer, notwithstanding that the27
seller may be obligated to repurchase the receivable, or the buyer may28
otherwise have recourse against the seller if the receivable is not paid when due,29
and further notwithstanding that the seller may be entitled to receive a portion30 SB NO. 256 ENROLLED
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of the collection proceeds. Furthermore, sales of receivables over exchanges1
located in this state shall not be construed, under any circumstance, to be a2
simulated sale under the simulation articles of the Civil Code.3
C. (1) The seller's written agreement in the underlying documents that4
the seller absolutely, unconditionally, and irrevocably intends that sales of the5
seller's receivables over an exchange located in this state result in true sales of6
such receivables for all purposes, shall be definitive and binding on the seller,7
and may not be subsequently disavowed or refuted by any of the following8
persons:9
(a) The seller.10
(b) The seller's successors or assigns, or any person acquiring rights11
from or through the seller, including the buyer.12
(c) Past and future owners, directors, officers, employees, agents,13
representatives and attorneys of the seller, or of its successors or assigns, or any14
person acquiring rights from or through the seller.15
(d) The account debtor or any other person obligated to pay the16
receivable.17
(e) All other third persons.18
(2) Any person, including anyone listed in Paragraph (1) of this19
Subsection, attempting to recharacterize a sale of a receivable over an exchange20
located in this state as anything other than a true sale under Louisiana law, shall21
be personally liable and obligated by operation of law to reimburse the buyer22
and the buyer's agents for attorney fees, court costs, arbitration costs, expert23
fees, and out-of-pocket expenses, including but not limited to travel expenses,24
expended in defense of the status of such sale as a true sale under Louisiana law.25
§3131.6. Binding effectiveness of Louisiana law26
A. Louisiana law, and specifically this Part and R.S. 10:9-109(e), shall27
apply to all sales of receivables over exchanges located in this state irrespective28
of the domicile or other location of the buyer or the seller.29
B. (1) The seller's written agreement and choice of law covenant in the30 SB NO. 256 ENROLLED
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underlying documents that Louisiana law shall apply to all sales of the seller's1
receivables over an exchange located in this state, shall be definitive for all2
purposes, and shall be absolutely, unconditionally and irrevocably binding on3
the seller, and shall not be subsequently disavowed or refuted by any of the4
following persons:5
(a) The seller.6
(b) The seller's successors or assigns, or anyone acquiring rights from or7
through the seller, including the buyer.8
(c) Past and future owners, directors, officers, employees, agents,9
representatives and attorneys of the seller, or of its successors or assigns, or10
anyone acquiring rights from or through the seller.11
(d) The account debtor or person obligated to pay the receivable.12
(e) All other third persons.13
(2) Any person, including anyone listed in Paragraph (1) of this14
Subsection, attempting to contest the applicability of Louisiana law and to apply15
the laws of another state or jurisdiction to the sale of the seller's receivables16
over an exchange located in this state, shall be personally liable and obligated17
by operation of law to reimburse the buyer and the buyer's agents for all18
attorney fees, court costs, arbitration costs, expert fees, and out-of-pocket19
expenses, including but not limited to travel expenses expended in defense of the20
status of such a sale as a true sale under Louisiana law.21
C. For the further purpose of applying relevant conflicts of law22
principles, the legislature declares that Louisiana public policy shall be most23
seriously impaired to the extent that the laws of another state or jurisdiction24
might be applied to sales of receivables over exchanges located in Louisiana. 25
As sales of receivables take place in Louisiana over Louisiana-based exchanges,26
Louisiana shall be deemed to have the most significant contact with the27
underlying sales transaction.28
§3131.7. Buyer ownership rights; evidence of ownership29
A. The buyer shall be deemed for all purposes, and not be limited to a30 SB NO. 256 ENROLLED
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bankruptcy context, to be the owner of a receivable purchased over an exchange1
located in this state, with the buyer having the right to all of the following2
actions:3
(1) To collect the receivable from the account debtor or other obligated4
person.5
(2) To resell the receivable to a subsequent buyer.6
(3) To pledge or otherwise grant a security interest in the receivable in7
favor of the buyer's creditor.8
(4) To reflect the receivable as an asset on the buyer's books and records.9
B. To the extent that the owner or operator of an exchange located in10
this state maintains records of sales of receivables over the exchange, such11
records shall serve as the single authoritative record evidencing buyer12
ownership of traded receivables for all purposes.13
§3131.8. Relationship to the UCC14
A. This Part supplements R.S. 10:9-109(e), and shall not be construed15
to implicitly amend or repeal any provision of the UCC, including but not16
limited to R.S. 10:1-201(35), 9-102(72)(D), 9-109(e), 9-301, 9-307, 9-310(a), 9-17
312(a), 9-317 through 9-339, 9-406, 9-501, and 9-607(a)(1).18
B. This Part and R.S. 10:9-109(e) provide for and define the true sale19
status and the state property ownership rights of buyers of receivables20
purchased over exchanges located in this state, and shall not independently21
provide for rules governing perfection, the effects of perfection or22
nonperfection, or the priority rights of buyers of receivables purchased over23
Louisiana based exchanges within the context of R.S. 10:9-301.24
§3131.9. Prohibition of actions 25
A seller shall not maintain an action or have any claim against an owner26
or operator of an exchange located in this state, or against a buyer of the27
receivables, unless there is an agreement in writing setting forth the relevant28
terms and conditions, and the agreement is signed by the seller and the owner29
or operator on its own behalf and as agent for the buyer.30 SB NO. 256 ENROLLED
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Section 2. This Act shall become effective upon signature by the governor or, if not1
signed by the governor, upon expiration of the time for bills to become law without signature2
by the governor, as provided by Article III, Section 18 of the Constitution of Louisiana. If3
vetoed by the governor and subsequently approved by the legislature, this Act shall become4
effective on the day following such approval.5
PRESIDENT OF THE SENATE
SPEAKER OF THE HOUSE OF REPRESENTATIVES
GOVERNOR OF THE STATE OF LOUISIANA
APPROVED: