Ky. Rev. Stat. » Chapter 355
Kentucky Revised Statutes

Ky. Rev. Stat. § 355.9-306 (2026)

Law governing perfection and priority of security interests in letter-of-

✓ current as of May 2026
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credit rights.

(1) Subject to subsection (3) of this section, the local law of the issuer's jurisdiction or a nominated person's jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in a letter-of-credit right if the issuer's jurisdiction or nominated person's jurisdiction is a state.

(2) For purposes of this part of this article, an issuer's jurisdiction or nominated person's jurisdiction is the jurisdiction whose law governs the liability of the issuer or nominated person with respect to the letter-of-credit right as provided in KRS 355.5-116.

(3) This section does not apply to a security interest that is perfected only under KRS 355.9-308(4). Effective: July 1, 2001 History: Repealed and reenacted 2000 Ky. Acts ch. 408, sec. 46, effective July 1, 2001. -- Amended 1996 Ky. Acts ch. 130, sec. 176, effective January 1, 1997. -- Amended 1986 Ky. Acts ch. 118, sec. 67, effective July 1, 1987. -- Created 1958 Ky. Acts ch. 77, sec. 9-306, effective July 1, 1960.

Notes of Decisions
Cited in 12 cases, 1968–2000 · leading case: Nolin Prod. Credit Ass'n v. Stone (In Re Stone), 52 B.R. 305 (Bankr. W.D. Ky. 1985).
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Nolin Prod. Credit Ass'n v. Stone (In Re Stone), 52 B.R. 305 (Bankr. W.D. Ky. 1985). · cites it 7× “2 KRS § 355.9-306 reads in pertinent part that: (1) “Proceeds” includes whatever is received when collateral or proceeds is sold, exchanged, collected or otherwise disposed of.”
Nolin Prod. Credit Ass'n v. Canmer Deposit Bank, 726 S.W.2d 693 (Ky. Ct. App. 1986). · cites it 4× “Under KRS 355.9-306(2) a security interest continues in collateral and its identifiable proceeds regardless of sale by the debtor unless such action was authorized by the secured creditor in the security agreement or otherwise.”
Allis-Chalmers Corp. v. Borg-Warner Acceptance Corp. (In Re Dr. C. Huff Co.), 44 B.R. 129 (Bankr. W.D. Ky. 1984). · cites it 3× “9-308, which provides in part: A purchaser of chattel paper who gives new value and takes possession of it in the ordinary course of his business has priority over a security interest in chattel paper which is claimed merely as proceeds of inventory subject to a security…”
Cessna Fin. Corp. v. Skyways Enter., Inc., 580 S.W.2d 491 (Ky. 1979). · cites it 4× “” KRS 355.9-306(2). However, there are many cases where by operation of statute a purchaser of collateral will take free of a perfected security interest under the “or otherwise” exception in KRS 355.”
State Auto. Mut. Ins. Co. v. Chrysler Credit Corp., 792 S.W.2d 626 (Ky. Ct. App. 1990). · cites it 2× “9-306(1), (2), (3) [2] which provides that insurance payable for the loss of collateral is considered proceeds from the collateral and the security interest of the creditor continues therein. This brings us to the central issue for our decision, but before entering this…”
Ranier v. Gilford, 688 S.W.2d 753 (Ky. Ct. App. 1985). · cites it 3× “9-201 or KRS 355.9-306; Gilford had the right to possession, and could pursue his claim for conversion against Ranier.”
Gen. Motors Acceptance Corp. v. Lincoln Nat'l Bank, 18 S.W.3d 337 (Ky. 2000). · cites it 7× “Under KRS 355.9-306, a security interest continues in the identifiable proceeds of collateral.”
In Re Megamarket of Lexington, Inc., 207 B.R. 527 (Bankr. E.D. Ky. 1997). · cites it 2× “One treatise on the Uniform Commercial Code discusses the applicability of section 9-104(g) to insurance premium refunds: One question that has arisen is the extent to which the exclusion should apply to insurance premium refunds when a secured party makes a claim to them as a…”
Pendleton v. Dealer Warehouse, Inc. (In Re Pendleton), 40 B.R. 306 (Bankr. W.D. Ky. 1984). · cites it 2× “KRS 355.9-306(1) defines “proceeds” to: “.”
Trimble v. North Ridge Farms, Inc., 700 S.W.2d 396 (Ky. 1985). · cites it 2× “I do not believe that KRS 355.9-306(2) should be given a broad enough interpretation so as to vitiate the security agreement here.”
Universal C. I. T. Credit Corp. v. Middlesboro Motor Sales, Inc., 424 S.W.2d 409 (Ky. Ct. App. 1968). “9-306(2) which provides: “Except where this Article otherwise provides, a security interest continues in collateral notwithstanding sale, exchange or other disposition thereof by the debtor unless Ms action was authorized by the secured party in the security agreement or…”
Farmer's Bank v. Dykes Tobacco Warehouse, Inc., 945 S.W.2d 433 (Ky. Ct. App. 1997). “KRS 355.9-306(2) provides that a security interest continues in collateral regardless of sale or exchange of the collateral unless authorized by the secured party and except where otherwise provided in the arti- *435 ele.”
Ky. Rev. Stat. § 355.9-306(1): 5 cases
Allis-Chalmers Corp. v. Borg-Warner Acceptance Corp. (In Re Dr. C. Huff Co.), 44 B.R. 129 (Bankr. W.D. Ky. 1984). “9-308, which provides in part: A purchaser of chattel paper who gives new value and takes possession of it in the ordinary course of his business has priority over a security interest in chattel paper which is claimed merely as proceeds of inventory subject to a security…”
State Auto. Mut. Ins. Co. v. Chrysler Credit Corp., 792 S.W.2d 626 (Ky. Ct. App. 1990). “9-306(1), (2), (3) [2] which provides that insurance payable for the loss of collateral is considered proceeds from the collateral and the security interest of the creditor continues therein. This brings us to the central issue for our decision, but before entering this…”
Pendleton v. Dealer Warehouse, Inc. (In Re Pendleton), 40 B.R. 306 (Bankr. W.D. Ky. 1984). “KRS 355.9-306(1) defines “proceeds” to: “.”
Nolin Prod. Credit Ass'n v. Stone (In Re Stone), 52 B.R. 305 (Bankr. W.D. Ky. 1985). “2 KRS § 355.9-306 reads in pertinent part that: (1) “Proceeds” includes whatever is received when collateral or proceeds is sold, exchanged, collected or otherwise disposed of.”
In Re Megamarket of Lexington, Inc., 207 B.R. 527 (Bankr. E.D. Ky. 1997). “One treatise on the Uniform Commercial Code discusses the applicability of section 9-104(g) to insurance premium refunds: One question that has arisen is the extent to which the exclusion should apply to insurance premium refunds when a secured party makes a claim to them as a…”
Ky. Rev. Stat. § 355.9-306(2): 7 cases
Nolin Prod. Credit Ass'n v. Canmer Deposit Bank, 726 S.W.2d 693 (Ky. Ct. App. 1986). “Under KRS 355.9-306(2) a security interest continues in collateral and its identifiable proceeds regardless of sale by the debtor unless such action was authorized by the secured creditor in the security agreement or otherwise.”
Cessna Fin. Corp. v. Skyways Enter., Inc., 580 S.W.2d 491 (Ky. 1979). “” KRS 355.9-306(2). However, there are many cases where by operation of statute a purchaser of collateral will take free of a perfected security interest under the “or otherwise” exception in KRS 355.”
Ranier v. Gilford, 688 S.W.2d 753 (Ky. Ct. App. 1985). “9-201 or KRS 355.9-306; Gilford had the right to possession, and could pursue his claim for conversion against Ranier.”
Gen. Motors Acceptance Corp. v. Lincoln Nat'l Bank, 18 S.W.3d 337 (Ky. 2000). “Under KRS 355.9-306, a security interest continues in the identifiable proceeds of collateral.”
Trimble v. North Ridge Farms, Inc., 700 S.W.2d 396 (Ky. 1985). “I do not believe that KRS 355.9-306(2) should be given a broad enough interpretation so as to vitiate the security agreement here.”
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