New York Uniform Commercial Code Law Section 9-205 - Use or Disposition of Collateral Permissible.

Section 9--205. Use or Disposition of Collateral Permissible.
(a) When  security  interest  not  invalid  or  fraudulent. A security
  interest is not invalid or fraudulent against creditors solely because:
     (1) the debtor has the right or ability to:
         (A) use,  commingle,  or  dispose  of  all  or  part  of  the
             collateral, including returned or repossessed goods;
         (B) collect,  compromise,  enforce,  or  otherwise  deal with
             collateral;
         (C) accept the return of collateral or make repossessions; or
         (D) use, commingle, or dispose of proceeds; or
     (2) the secured party fails to require the debtor to account  for
         proceeds or replace collateral.
(b) Requirements  of  possession  not  relaxed.  This section does not
  relax the requirements  of  possession  if  attachment,  perfection,  or
  enforcement  of  a  security  interest  depends  upon  possession of the
  collateral by the secured party.

Last modified: February 3, 2019