Paula, an accountant, lent money to a company that was already indebted to her f

Question

Paula, an accountant, lent money to a company that was already indebted to her for services rendered. As security for the loan and to secure payment for the services, the company assigned to Paula a portion of its expected recovery of a pending lawsuit. Paula did not file a financing statement with regard to the assign- ment. Subsequently, Debra was awarded a judgment against the company in another lawsuit. Debra, without knowledge of the assignment to Paula, had the sheriff levy against the company's property. At the sheriff's execution sale, all of the company's rights in the pend- lawsuit were sold to Debra. When the lawsuit was ettled, Paula claimed rights to the proceeds. Is Paula entitled to the proceeds of the lawsuit pursuant to her ecuritv interest? Explain. ing

Explanation / Answer

Here Paula an accountant gives loan to the company which. For security the company assigned a portion of expected recovery in law suit.

Here the contract is valid. Paula can excercise the interest in proceedings of the expected recovery. The assignment of security is valid in law.

Here Paula have to intimate to the court about the assignment . If Paula is silent then there is no chance of recovery of debt. If Paula intimated with in the period provided by the court then Paula can exercise rights against security.

Here Paula can exercise rights against security sale proceeds only when she intimated to the court with valid documents.

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