Louisiana Revised Statutes 9:3137.2 – Legislative intent
Terms Used In Louisiana Revised Statutes 9:3137.2
- Bankruptcy: Refers to statutes and judicial proceedings involving persons or businesses that cannot pay their debts and seek the assistance of the court in getting a fresh start. Under the protection of the bankruptcy court, debtors may discharge their debts, perhaps by paying a portion of each debt. Bankruptcy judges preside over these proceedings.
- Common law: The legal system that originated in England and is now in use in the United States. It is based on judicial decisions rather than legislative action.
- Recourse: An arrangement in which a bank retains, in form or in substance, any credit risk directly or indirectly associated with an asset it has sold (in accordance with generally accepted accounting principles) that exceeds a pro rata share of the bank's claim on the asset. If a bank has no claim on an asset it has sold, then the retention of any credit risk is recourse. Source: FDIC
A. It is the intent of the legislature to encourage and promote businesses to offer sellers the ability to sell their receivables to qualified buyers over electronic and other types of exchanges located in this state, thereby availing themselves of Louisiana civil law principles not found in common law jurisdictions, and further availing themselves of the true sale provisions of this Part and La. Rev. Stat. 10:9-109(e).
B. The legislature declares the following actions to be the public policy of this state.
(1) All sales of receivables over exchanges located in Louisiana shall be subject to Louisiana law, and specifically subject to this Part and to La. Rev. Stat. 10:9-109(e).
(2) Such sales shall result in true sales for all purposes and not be limited to a bankruptcy context.
(3) Such sales shall not be subject to recharacterization as a simulated sale or as a loan, extension of credit, or other credit accommodation by the buyer to the seller, notwithstanding that the seller may be obligated to repurchase the receivable, or the buyer may have other recourse against the seller, if the receivable is not timely paid, and further notwithstanding that the seller may be entitled to receive a portion of the collection proceeds.
C. This Part and La. Rev. Stat. 10:9-109(e) specifically reject common law legal theories under which recourse sales of receivables have been recharacterized as loans or credit accommodations, as being contrary to Louisiana civil law principles that apply to sales of receivables over exchanges located in this state.
Acts 2010, No. 958, §1, eff. July 6, 2010.