KRS 355.9-622: Effect of acceptance of collateral.

(1) A secured party's acceptance of collateral in full or partial satisfaction of the

obligation it secures:

(a) Discharges the obligation to the extent consented to by the debtor;

(b) Transfers to the secured party all of a debtor's rights in the collateral;

(c) Discharges the security interest or agricultural lien that is the subject of the

debtor's consent and any subordinate security interest or other subordinate

lien; and

(d) Terminates any other subordinate interest.

(2) A subordinate interest is discharg ed or terminated under subsection (1) of this

section, even if the secured party fails to comply with this article.