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One last thing - make sure you keep documentation of your UCC search results with your loan file. Auditors and examiners always want to see that due diligence was done.
Also helps if you ever need to prove the timeline of your filings for priority disputes.
Will do - appreciate all the advice from everyone here!
Just want to echo what others have said about the search being absolutely essential. I learned this the hard way when I filed a UCC-3 continuation on what I thought was an active filing, only to find out later that the debtor had changed their legal name and the original UCC-1 was effectively invalid. The filing office accepted my continuation but it provided zero security interest protection. Now I always do a comprehensive search within 24 hours of any UCC filing - original, amendment, or continuation. Better to spend a little time and money upfront than deal with a worthless security interest later.
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Bottom line: the debtor is whoever has rights in the collateral, not necessarily the borrower. Sounds like your subsidiary is the debtor if they own the equipment. Just make sure you get their exact legal name from state records and you should be good to go.
Thanks everyone for the advice. Sounds like the consensus is the subsidiary should be the debtor since they own the equipment. I'll double-check the exact legal name and get this filed.
Good luck with the filing! These multi-entity deals can be tricky but you seem to have a good handle on it now.
As someone new to UCC filings, this thread has been incredibly helpful! I'm currently studying for my paralegal certification and the debtor identification rules have been confusing me. The tip about thinking "who would sign the termination statement" really clarifies things. One follow-up question - if the subsidiary owns the equipment but the LLC has some kind of lease or usage agreement, would that change anything about who should be listed as debtor? Or does outright ownership trump any lease arrangements?
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This whole thread has been incredibly insightful - thank you all for sharing your real-world experiences with UCC 9-406! As someone new to receivables financing, I'm seeing that there's a huge gap between understanding the statutory language and actually implementing these notifications effectively in practice. A few questions for the group: (1) For those who've dealt with large account debtor portfolios (100+ accounts), what's your take on batch notifications versus individual customized letters? Is there a meaningful difference in response rates? (2) I keep seeing references to "account debtor pushback" - what are the most common objections you encounter, and do you find that certain industries or types of businesses are more resistant than others? (3) Finally, has anyone dealt with international account debtors where the receivables cross state or national borders? I'm wondering if 9-406's anti-assignment clause override still applies when you're dealing with foreign contract law. The practical tips about templates, timing, and coordination with debtors are exactly what I needed to bridge the gap between the legal theory and actual implementation.
Great questions! I've dealt with large portfolios and found that a hybrid approach works best - use a solid template for accounts under $25K but customize for anything larger or where you know the account debtor has specific concerns. On industry pushback, I'd add construction/contracting to Ella's list - they often have complex lien and payment bond issues that make them nervous about payment redirections. For international receivables, definitely get counsel involved, but also consider whether the juice is worth the squeeze. I've seen deals where the legal costs of sorting out cross-border issues exceeded the value of the foreign receivables. One tip - if you do have international accounts, try to group them by governing law so you can get more efficient legal opinions on the 9-406 effectiveness in each jurisdiction.
This is such a valuable thread for understanding the practical side of 9-406! To add to the international discussion - I recently worked on a deal with Canadian account debtors and found that while 9-406 applied to our US security interest, the Canadian accounts had their own provincial Personal Property Security Act (PPSA) considerations that affected collection procedures. We ended up having to send dual-format notifications to comply with both jurisdictions' requirements. Also, on the industry-specific pushback point, I'd add that retail and hospitality businesses often get nervous because they're used to dealing with factoring companies that completely take over the customer relationship, so they assume any receivables assignment means their vendor is in financial trouble. A simple explanation that this is asset-based lending rather than factoring usually resolves their concerns. One more practical tip - consider including a FAQ sheet with your notifications for larger account debtors that addresses common concerns upfront.
This entire discussion has been a masterclass in the practical application of UCC 9-406! As someone who's been wrestling with these notification requirements, I'm amazed at how much the real-world implementation differs from what you'd expect just reading the statute. The points about industry-specific pushback are particularly enlightening - I hadn't considered that different sectors would have such varied responses to receivables assignments. One thing I'm still unclear on: when you encounter an account debtor who acknowledges the notification but claims they have legitimate setoffs or counterclaims against the original debtor, what's the best practice for handling that? Do you typically require documentation of those claims upfront, or do you take a wait-and-see approach? I'm trying to balance protecting our client's interests while not unnecessarily antagonizing account debtors who might have valid concerns. Also, has anyone dealt with account debtors who want to escrow disputed amounts rather than pay them to either party? I'm wondering if that's something we should accommodate or push back against.
Great question about setoffs and counterclaims! This is where 9-404 intersects with 9-406 - remember that under 9-404, you generally take the receivables subject to any defenses the account debtor could assert against the original debtor. My approach is to request documentation of claimed setoffs upfront, but with a reasonable deadline (usually 10-15 business days). This serves two purposes: it separates legitimate claims from fishing expeditions, and it gives you time to investigate with your debtor before the account debtor stops paying entirely. For escrow arrangements, I'm generally open to them for disputed amounts if the account debtor continues paying undisputed portions. It's often better to have part of the receivable secured in escrow than to have the whole thing tied up in disputes. Just make sure the escrow terms are clear about release conditions and who controls the funds. Document everything thoroughly because these situations can get messy quickly if not handled properly from the start.
Your question about setoffs and escrow arrangements really resonates with me - I've been in similar situations multiple times. Building on what Ally said about 9-404, I'd add that it's crucial to get a detailed breakdown of any claimed setoffs before agreeing to escrow arrangements. I've seen account debtors suddenly "discover" setoffs worth exactly the amount they owe once they receive notification. One red flag to watch for is when the claimed setoff relates to issues that supposedly existed for months but were never raised until after they got your notification. In those cases, I push back hard and require contemporaneous documentation (emails, invoices, prior correspondence) that shows the setoff was a legitimate ongoing dispute rather than a post-notification invention. For escrow, I agree it can work well, but I always insist that interest earned on escrowed funds flows to the prevailing party, and I try to include a deadline for resolving the underlying dispute - otherwise you end up with money sitting in escrow indefinitely while lawyers rack up fees.
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Bottom line for Florida: 5 years, file continuation within 6 months before expiration, make sure debtor names match exactly, and don't procrastinate. Set a calendar reminder for at least 6 months before your expiration date so you don't forget.
Perfect summary, thanks everyone. I'll set my reminder for 6 months out and start preparing the continuation paperwork early.
Smart move. Better to be over-prepared than scrambling at the last minute.
Great thread everyone! As someone who's been handling UCC filings for commercial lenders for over a decade, I want to emphasize one additional point that often gets overlooked. When you file your UCC-3 continuation statement, make sure you're using the correct filing number from your original UCC-1. I've seen situations where people accidentally use an amendment number instead of the base filing number, which can cause the continuation to be rejected or not properly linked to the original filing. Also, keep detailed records of all your UCC-related filings - not just the initial one. This becomes crucial if you ever need to demonstrate an unbroken chain of perfection, especially in bankruptcy situations where trustees might challenge your security interest. The Florida system is pretty reliable, but having your own backup documentation has saved me multiple times when system records were incomplete or unclear.
This is excellent advice about the filing numbers! I'm new to handling secured transactions and hadn't thought about the documentation chain aspect. Quick question - when you mention keeping backup documentation, are you talking about just the state-issued receipts or should I be maintaining copies of the actual filed documents too? And is there a recommended way to organize these records for easy retrieval later?
Emily Parker
This is such a timely discussion for me as a newer member here. I'm working on my first solar equipment UCC termination and was second-guessing myself on the name matching requirements. Reading through everyone's experiences really drives home how critical exact character matching is - I had no idea that even spacing differences could cause rejections. The recommendation to pull the original UCC-1 directly from the Secretary of State database rather than relying on loan documents is particularly valuable advice I wouldn't have thought of. I'm definitely going to look into those document verification tools mentioned as well, especially since we're expecting more solar deals in our pipeline. Thanks to everyone who shared their experiences!
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GalacticGladiator
•Welcome to the community! You're absolutely right to be cautious with your first solar UCC termination - these can be tricky even for experienced professionals. The character-by-character matching requirement really can't be overstated. I've seen terminations delayed for weeks over seemingly minor discrepancies. Since you mentioned you're new to this, one additional tip: when you pull that original UCC-1 from the Secretary of State database, take a screenshot or save a PDF copy for your records. That way you have the exact formatting reference for any future amendments or if you need to file additional terminations for similar entities. Good luck with your termination!
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Madison King
As someone who's been handling UCC filings for over a decade, I can't emphasize enough how crucial exact name matching is for terminations. I've seen too many deals delayed because of seemingly insignificant differences like periods, commas, or spacing. For solar equipment deals specifically, I always recommend creating a checklist: 1) Pull the original UCC-1 from the state database, 2) Copy the debtor name character-for-character, 3) Double-check entity designations (LLC vs L.L.C.), and 4) Verify any Roman numerals match exactly. The solar industry's complex entity structures make this even more critical - I've dealt with entities that have nearly identical names but are completely different legal entities. Better to spend an extra 10 minutes verifying than dealing with rejected filings and angry loan officers!
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