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Best Buy is a retail seller of Sony TVs. Sony sells Best Buy 500 TVs on credit, keeping a security interest in the TVs and
Best Buy is a retail seller of Sony TVs. Sony sells Best Buy 500 TVs on credit, keeping a security interest in the TVs and their proceeds. Sony perfects its security interest by filing a financing statement. Best Buy sells a Sony TV to Hunt on credit. Hunt signs an agreement to pay Best Buy installment payments of $100 per month until the entire purchase price, plus interest, is paid in full. Best Buy hits hard times and needs cash fast. Best Buy sells Hunt"s obligation to make installment payments to Big Bob"s Debt Collectors for cash. Big Bob"s takes possession of Best Buy"s chattel paper, including Hunt"s. Best Buy uses the cash from the loan to pay other bills, and stops paying Sony. Best Buy defaults on its agreement with Sony and Sony repossess all of Best Buy"s remaining TVs and the proceeds of previous sales (including chattel paper - the promises to pay installment payments by TV purchasers). Both Sony and Big Bob"s claim the right to receive Hunt"s stream of payments. In this case, Sony will prevail since they had a prior perfected security interest in Best Buy"s inventory and its proceeds (including chattel paper). True False
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