Promissory Notes Deemed To Be ‘Securities’

Law360, New York (March 24, 2008, 12:00 AM EDT) -- In a divided decision, New York state’s highest court has concluded that promissory notes issued by a company to various holders constituted "securities" within the meaning of Article 8 of the Uniform Commercial Code (UCC8).

Because the notes were deemed to be securities, the New York Court of Appeals determined that UCC8 governed the rights of the holders thereunder. Highland Capital Management LP v. Schneider, 866 N.E.2d.1020 (N.Y., Apr. 3, 2007).

While the facts of the case are not unusual, they are instructive. A company issued...
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