IX. — 2:309 Commingling of assets subject to proprietary security

Where encumbered goods are commingled in such a way that it is impossible or economically unreasonable to separate the resulting mass or mixture into its original constituents, but it is possible and economically reasonable to separate the mass or mixture into proportionate quantities, the security rights that had encumbered the goods continue as encumbrances of the rights which the former owners of the goods have in the resulting mass or mixture by virtue of VIII. — 5:202 (Commingling) paragraph (1)); this encumbrance is limited to a share proportionate to the value of the respective goods at the moment of commingling.

Where the goods that are commingled as set out in the preceding paragraph were subject to a retention of ownership device, VIII. — 5:202 (Commingling) paragraph (1) applies with the proviso that the rights of the holder of the retention of ownership device are continued in a share of the resulting mass or mixture proportionate to the value of the respective goods at the moment of commingling.

Any secured creditor is entitled to exercise the security provider's right to separate a quantity equivalent to that co-owner's undivided share out of the mass or mixture (VIII. — 5:202 (Commingling) paragraph (2)).

If encumbered financial assets held by the secured creditor are commingled by the latter in a fund, the security provider is entitled to a share in the fund. Paragraph (1) applies with appropriate adaptations.

If in the cases covered by paragraphs (1), (2) and (4) the assets of the mass or fund do not suffice to satisfy all co-owners, VIII. — 2:305 (Transfer of goods forming part of a bulk) paragraphs (4) and (5) apply accordingly.