848.3
. (a) A security interest in recovery property is valid, is
enforceable against the pledgor and third parties, subject to the
rights of any third parties holding security interests in the
recovery property perfected in the manner described in this section,
and attaches when all of the following have taken place:
(1) The commission has issued the financing order authorizing the
fixed recovery amounts included in the recovery property.
(2) Value has been given by the pledgees of the recovery property.
(3) The pledgor has signed a security agreement covering the
recovery property.
(b) A valid and enforceable security interest in recovery property
is perfected when it has attached and when a financing statement has
been filed in accordance with Chapter 5 (commencing with Section
9501) of Division 9 of the Commercial Code naming the pledgor of the
recovery property as "debtor" and identifying the recovery property.
Any description of the recovery property shall be sufficient if it
refers to the financing order creating the recovery property. A copy
of the financing statement shall be filed with the commission by the
recovery corporation that is the pledgor or transferor of the
recovery property, and the commission may require the recovery
corporation to make other filings with respect to the security
interest in accordance with procedures it may establish, provided
that the filings shall not affect the perfection of the security
interest.
(c) A perfected security interest in recovery property is a
continuously perfected security interest in all revenues and proceeds
arising with respect thereto, whether or not the revenues or
proceeds have accrued. Conflicting security interests shall rank
according to priority in time of perfection. Recovery property shall
constitute property for all purposes, including for contracts
securing recovery bonds, whether or not the revenues and proceeds
arising with respect thereto have accrued.
(d) Subject to the terms of the security agreement covering the
recovery property and the rights of any third parties holding
security interests in the recovery property perfected in the manner
described in this section, the validity and relative priority of a
security interest created under this section is not defeated or
adversely affected by the commingling of revenues arising with
respect to the recovery property with other funds of the recovery
corporation that is the pledgor or transferor of the recovery
property, or by any security interest in a deposit account of that
recovery corporation perfected under Division 9 (commencing with
Section 9101) of the Commercial Code into which the revenues are
deposited. Subject to the terms of the security agreement, upon
compliance with the requirements of paragraph (1) of subdivision (b)
of Section 9312 of the Commercial Code, the pledgees of the recovery
property shall have a perfected security interest in all cash and
deposit accounts of the recovery corporation in which revenues
arising with respect to the recovery property have been commingled
with other funds, but the perfected security interest shall be
limited to an amount not greater than the amount of the revenues with
respect to the recovery property received by the recovery
corporation within 12 months before (1) any default under the
security agreement or (2) the institution of insolvency proceedings
by or against the recovery corporation, less payments from the
revenues to the pledgees during that 12-month period.
(e) If an event of default occurs under the security agreement
covering the recovery property, the pledgees of the recovery
property, subject to the terms of the security agreement, shall have
all rights and remedies of a secured party upon default under
Division 9 (commencing with Section 9101) of the Commercial Code, and
are entitled to foreclose or otherwise enforce their security
interest in the recovery property, subject to the rights of any third
parties holding prior security interests in the recovery property
perfected in the manner provided in this section. In addition, the
commission may require in the financing order creating the recovery
property that, in the event of default by the recovery corporation in
payment of revenues arising with respect to the recovery property,
the commission and any successor thereto, upon the application by the
pledgees or transferees, including transferees under Section 848.4,
of the recovery property, and without limiting any other remedies
available to the pledgees or transferees by reason of the default,
shall order the sequestration and payment to the pledgees or
transferees of revenues arising with respect to the recovery
property. Any order shall remain in full force and effect
notwithstanding any bankruptcy, reorganization, or other insolvency
proceedings with respect to the debtor. Any surplus in excess of
amounts necessary to pay principal, premium, if any, interest, costs,
and arrearages on the recovery bonds, and other costs arising under
the security agreement, shall be remitted to the debtor.
(f) Sections 9204 and 9205 of the Commercial Code apply to a
pledge of recovery property by the recovery corporation, an affiliate
of the recovery corporation, or a financing entity.
(g) This section sets forth the terms by which a consensual
security interest can be created and perfected in the recovery
property. Unless otherwise ordered by the commission with respect to
any series of recovery bonds on or prior to the issuance of the
series, there shall exist a statutory lien as provided in this
subdivision. Upon the effective date of the financing order, there
shall exist a first priority lien on all recovery property then
existing or thereafter arising pursuant to the terms of the financing
order. This lien shall arise by operation of this section
automatically without any action on the part of the recovery
corporation, any affiliate thereof, the financing entity, or any
other person. This lien shall secure all obligations, then existing
or subsequently arising, to the holders of the recovery bonds issued
pursuant to the financing order, the trustee or representative for
the holders, and any other entity specified in the financing order.
The persons for whose benefit this lien is established shall, upon
the occurrence of any defaults specified in the financing order, have
all rights and remedies of a secured party upon default under
Division 9 (commencing with Section 9101) of the Commercial Code, and
are entitled to foreclose or otherwise enforce this statutory lien
in the recovery property. This lien attaches to the recovery property
regardless of who owns, or is subsequently determined to own, the
recovery property, including the recovery corporation, any affiliate
thereof, the financing entity, or any other person. This lien shall
be valid, perfected, and enforceable against the owner of the
recovery property and all third parties upon the effectiveness of the
financing order without any further public notice; provided,
however, that any person may, but is not required to, file a
financing statement in accordance with subdivision (b). Financing
statements so filed may be "protective filings" and are not evidence
of the ownership of the recovery property.
A perfected statutory lien in recovery property is a continuously
perfected lien in all revenues and proceeds arising with respect
thereto, whether or not the revenues or proceeds have accrued.
Conflicting liens shall rank according to priority in time of
perfection. Recovery property shall constitute property for all
purposes, including for contracts securing recovery bonds, whether or
not the revenues and proceeds arising with respect thereto have
accrued.
In addition, the commission may require, in the financing order
creating the recovery property, that, in the event of default by the
recovery corporation in the payment of revenues arising with respect
to recovery property, the commission and any successor thereto, upon
the application by the beneficiaries of the statutory lien, and
without limiting any other remedies available to the beneficiaries by
reason of the default, shall order the sequestration and payment to
the beneficiaries of revenues arising with respect to the recovery
property. Any order shall remain in full force and effect
notwithstanding any bankruptcy, reorganization, or other insolvency
proceedings with respect to the debtor. Any surplus in excess of
amounts necessary to pay principal, premium, if any, interest, costs,
and arrearages on the recovery bonds, and other costs arising in
connection with the documents governing the recovery bonds, shall be
remitted to the debtor.