Ark. Code Ann. § 4-9-615 (2026)
Application of proceeds of disposition — Liability for deficiency and right to surplus
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A secured party shall apply or pay over for application the cash proceeds of disposition under § 4-9-610 in the following order to:
- the reasonable expenses of retaking, holding, preparing for disposition, processing, and disposing, and, to the extent provided for by agreement and not prohibited by law, reasonable attorney's fees and legal expenses incurred by the secured party;
- the satisfaction of obligations secured by the security interest or agricultural lien under which the disposition is made;
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the satisfaction of obligations secured by any subordinate security interest in or other subordinate lien on the collateral if:
- the secured party receives from the holder of the subordinate security interest or other lien an authenticated demand for proceeds before distribution of the proceeds is completed; and
- in a case in which a consignor has an interest in the collateral, the subordinate security interest or other lien is senior to the interest of the consignor; and
- a secured party that is a consignor of the collateral if the secured party receives from the consignor an authenticated demand for proceeds before distribution of the proceeds is completed.
- If requested by a secured party, a holder of a subordinate security interest or other lien shall furnish reasonable proof of the interest or lien within a reasonable time. Unless the holder does so, the secured party need not comply with the holder's demand under subsection (a)(3).
- A secured party need not apply or pay over for application noncash proceeds of disposition under § 4-9-610 unless the failure to do so would be commercially unreasonable. A secured party that applies or pays over for application noncash proceeds shall do so in a commercially reasonable manner.
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If the security interest under which a disposition is made secures payment or performance of an obligation, after making the payments and applications required by subsection (a) and permitted by subsection (c):
- unless subsection (a)(4) requires the secured party to apply or pay over cash proceeds to a consignor, the secured party shall account to and pay a debtor for any surplus; and
- the obligor is liable for any deficiency.
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If the underlying transaction is a sale of accounts, chattel paper, payment intangibles, or promissory notes:
- the debtor is not entitled to any surplus; and
- the obligor is not liable for any deficiency.
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The surplus or deficiency following a disposition is calculated based on the amount of proceeds that would have been realized in a disposition complying with this part to a transferee other than the secured party, a person related to the secured party, or a secondary obligor if:
- the transferee in the disposition is the secured party, a person related to the secured party, or a secondary obligor; and
- the amount of proceeds of the disposition is significantly below the range of proceeds that a complying disposition to a person other than the secured party, a person related to the secured party, or a secondary obligor would have brought.
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A secured party that receives cash proceeds of a disposition in good faith and without knowledge that the receipt violates the rights of the holder of a security interest or other lien that is not subordinate to the security interest or agricultural lien under which the disposition is made:
- takes the cash proceeds free of the security interest or other lien;
- is not obligated to apply the proceeds of the disposition to the satisfaction of obligations secured by the security interest or other lien; and
- is not obligated to account to or pay the holder of the security interest or other lien for any surplus.
History. Acts 2001, No. 1439, § 1.
Research References
ALR.
Definition and Treatment of “Instruments” Under Revised Article 9 of Uniform Commercial Code. 42 A.L.R.7th Art. 5 (2019).
Case Notes
Deficiency Judgment.
Bankruptcy court's confirmation of Chapter 13 debtors' amended plan proposing to surrender their 910-car in full satisfaction of a creditor's claim was reversed because (1) the “hanging paragraph” in 11 U.S.C. § 1325(a) made 11 U.S.C. § 506(a) inapplicable to 910-claims, and the 910-claim was still an “allowed secured claim” because it was secured under state law; (2) nothing in 11 U.S.C. § 1325(a)(5)(C) stated that a claim was considered paid in full when the debtor surrendered the vehicle, so the creditor was entitled to an unsecured deficiency claim if there was a right to a deficiency judgment under state law; (3) the parties' security agreement gave the creditor the right to repossess and sell the vehicle in case of default, and provided that if the money from the sale was not enough to pay all that was owed, the debtor had to pay the rest, plus interest; and (4) subdivision (d)(2) of this section allowed the creditor a deficiency judgment, so the creditor was entitled to an unsecured deficiency claim in the amount of the difference between the debt owed at the time of filing and the amount received from liquidation. AmeriCredit Fin. Servs. v. Moore, 517 F.3d 987 (8th Cir. 2008).
Surplus.
Where at the time of the repossession the debtor's payoff balance was less than the amount the vehicle sold for after repossession and where the trial court found that the surplus to be accounted for by the secured party was the sale price reduced by the payoff balance, further reduced by the repossession and resale expenses, the trial court was justified under the pre-2001 version of this chapter in finding that there was a surplus. Harrell Motors, Inc. v. Sweeten, 4 Ark. App. 230, 628 S.W.2d 878 (1982) (decision under prior law).
The requirement of former § 4-9-504 to account for any surplus includes the payment of the surplus to the debtor. Bill Fitts Auto Sales, Inc. v. Daniels, 325 Ark. 51, 922 S.W.2d 718 (1996) (decision under prior law).
The debtor's right to a surplus from the disposition of the collateral cannot be waived under the pre-2001 version of this chapter even by an express agreement. Bill Fitts Auto Sales, Inc. v. Daniels, 325 Ark. 51, 922 S.W.2d 718 (1996) (decision under prior law).