A mistake included with formal loan documents cannot be invalidated because it would negatively impact creditors relying on such representations, the Delaware Supreme Court has ruled. The court’s decision, in response to a certified question of law from a New York federal appellate court, held that a termination statement filed must stand even if the parties involved, General Motors Corp. and JPMorgan Chase Bank N.A., did not intend to end the loan’s security interest.
“To hold that parties cannot rely upon authorized filings unless the secured party subjectively understood the effect of its own action would disrupt and undermine the secured lending markets,” said Chief Justice Leo E. Strine Jr. in Official Committee of Unsecured Creditors of Motors Liquidation v. JPMorgan Chase Bank. “It is not clear to us how an inquiring party would find out whether a secured party understood and intended the consequences of its own filing.”
