§ 45:1320 — Sale of property

§1320. Sale of property
The sale and assignment of system restoration property is governed by this Section.
All of the following shall apply to a sale and assignment under this Section:
(1) The sale of system restoration property by the corporation to an issuer that the
parties have in the governing contract expressly stated to be a sale is an absolute transfer and
true sale of, and not a security interest in, the transferor's right, title, and interest in, to, and
under the system restoration property. For all purposes, the parties' characterization of a
transaction as a sale of an interest in system restoration property shall be conclusive that the
transaction is a true sale and that ownership has passed to the issuer characterized as the
purchaser, regardless of whether the issuer has possession of any documents evidencing or
pertaining to the interest. After such a transaction, such system restoration property is not
subject to any claims of the corporation or the corporation's creditors, other than creditors
holding a prior security interest in that system restoration property perfected in accordance
with this Part.
(2) The characterization of the sale and assignment as a true sale or other absolute
transfer under Paragraph (1) of this Section and the corresponding characterization of the
issuer's property interest shall be determinative and conclusive irrespective of, and is not
affected or impaired by, the existence of any of the following circumstances:
(a) Commingling of amounts arising with respect to the system restoration property
with other amounts.
(b) The retention by the corporation of an entitlement to any surplus in the system
restoration property.
(c) The utility acting as the collector of the system restoration charges.
(d) The contrary or other treatment of the sale and assignment, for tax, financial
reporting, or other purposes.
(e) The granting or providing to holders of the system restoration bonds of a
preferred right to the system restoration property, or credit enhancement with respect to the
system restoration bonds.
(3) The ownership of an interest in system restoration property is voluntarily
transferred by a contract between the owner and the assignee that purports to transfer the
ownership of that interest. Unless otherwise provided, the transfer of ownership takes place
between the parties as soon as there is written agreement on the interest, the purchase price
is fixed, and the financing order has been issued. Such transfer shall be perfected and take
effect against all third parties, including without limitation subsequent lien creditors when
the transfer has become effective between the parties and when the pertinent utility collecting
the system restoration charge has been given notice of the sale or assignment. Delivery of
such an interest in system restoration property shall take place by operation of law upon such
notice.
(4) The giving of notice to the pertinent utility shall be the only method of perfecting
a sale or assignment of system restoration property. The sale or assignment of an interest in
system restoration property perfected by such notice is effective against the customers owing
payment of the system restoration charges, creditors of the transferor, subsequent transferees,
and all other third persons, notwithstanding the absence of actual knowledge of or notice to
the customers of the utility of the sale or assignment.
(5) The priority of the conflicting ownership interests of assignees in the same
interest or rights in any system restoration property is determined as follows:
(a) Conflicting perfected interests or rights of assignees rank according to priority
in time of perfection by notice.
(b) A perfected interest or right of an assignee has priority over a conflicting
unperfected interest or right of an assignee.
(c) A perfected interest or right of an assignee has priority over a person who
becomes a lien creditor after the perfection of such assignee's interest or right.
(6) The priority of a sale or assignment perfected under this Section is not impaired
by any later modification of the financing order or system restoration property or by the
commingling of funds arising from system restoration property with other funds. Any other
security interest that may apply to those commingled funds shall be terminated when those
funds are transferred to a segregated account for the assignee or a financing party. If system
restoration property has been transferred to an assignee or financing party, the utility or other
person serving as collection agent shall hold any proceeds of that property as a mandatary
and fiduciary and deliver such proceeds to the assignee or financing party.
(7) No customer of a utility owing payment of a system restoration charge may, by
agreement with the utility or otherwise, prohibit, restrict, or require the consent of such
customer to the assignment, pledge, or transfer of the system restoration charge.

Legislative History

Acts 2007, No. 55, §3, eff. June 18, 2007; Acts 2021, No. 293, §4, eff. June 14, 2021.