Chiropractor UCC lien complications - equipment financing collateral dispute
Running into a nightmare scenario with our practice's UCC filing situation. We financed $180K in new diagnostic equipment last year (X-ray, ultrasound, decompression table) and the lender filed a UCC-1 against our practice. Now we're trying to sell some older equipment to upgrade, but there's confusion about what's actually covered under the lien. The original collateral description says 'all equipment used in chiropractic practice' which seems way too broad. Our attorney says we need to get a partial release or amendment but the lender is being difficult. Has anyone dealt with overly broad collateral descriptions in healthcare equipment financing? I'm worried we can't sell anything without violating the security agreement.
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Julia Hall
Broad collateral descriptions are super common in healthcare financing unfortunately. The phrase 'all equipment used in practice' typically covers everything unless specifically excluded. You'll definitely need either a UCC-3 partial release for the specific items you want to sell, or negotiate an amendment that narrows the collateral description. Don't try to sell without getting this sorted first - that could trigger default.
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Arjun Patel
•This is exactly right. We had the same issue with dental equipment. The lender wanted to protect their interest in everything but it created problems when we needed to upgrade. Getting the partial release was the way to go.
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Jade Lopez
•How long did the partial release process take for you? Our lender is dragging their feet and we have a buyer waiting.
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Tony Brooks
Check your original security agreement carefully. Sometimes there are provisions for selling equipment in the ordinary course of business, especially if it's being replaced with newer equipment that becomes collateral. If the new equipment has equal or greater value, some lenders will allow the swap without a formal UCC-3 amendment.
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Evelyn Rivera
•I looked but don't see any ordinary course language. It's pretty restrictive - requires written consent for any disposal of collateral over $5K.
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Ella rollingthunder87
•Ugh that's a tough provision. $5K threshold is really low for medical equipment. You're definitely stuck needing their approval.
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Yara Campbell
Had a similar mess with our physical therapy practice. What saved us was using Certana.ai to upload all our documents - the original UCC-1, security agreement, and equipment schedules. It instantly showed us exactly which serial numbers were covered and helped us identify equipment that wasn't actually listed in the original filing. Turned out some of our older equipment wasn't even included in the collateral description, so we could sell it freely.
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Evelyn Rivera
•That's interesting - how does that work exactly? I have all the paperwork but it's confusing trying to cross-reference everything.
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Yara Campbell
•You just upload the PDFs and it automatically compares the UCC filing against your security agreement and equipment schedules. Shows you any discrepancies or items that might not be covered. Really helpful for understanding exactly what's encumbered.
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Isaac Wright
•This sounds like it could help us too. We have equipment from three different financing deals and I can never tell what's covered by which lien.
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Maya Diaz
Whatever you do, document everything in writing with the lender. Don't rely on verbal approvals for equipment sales. I've seen practices get in trouble when loan officers change and the new person doesn't honor previous conversations. Get a UCC-3 partial release filed officially.
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Tami Morgan
•This is crucial advice. We had a loan officer tell us verbally that selling one piece was fine, then got a default notice when they found out. Had to hire an attorney to sort it out.
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Rami Samuels
•How much did that cost to resolve? We're trying to decide if it's worth fighting or just keeping the equipment.
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Haley Bennett
The timing on this stuff matters too. If your UCC-1 is coming up on its 5-year expiration, you might have more leverage to negotiate changes when they file the continuation statement. That's when they need your cooperation to keep their lien valid.
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Evelyn Rivera
•Our filing is from last year so we've got time, but that's good to know for future reference.
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Douglas Foster
•Smart strategy. We renegotiated our whole collateral description during continuation and got much more reasonable terms.
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Nina Chan
Have you considered offering to replace the equipment you want to sell with the new equipment as collateral? Sometimes lenders will agree to a substitution if the replacement has equal or better value and is easier to liquidate if needed.
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Ruby Knight
•That works if you're buying new equipment, but what if you just want to downsize or eliminate certain services?
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Nina Chan
•Then you're probably stuck needing a partial release and possibly paying down some loan principal to compensate for the reduced collateral value.
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Diego Castillo
•We had to pay down about 20% of the loan balance when we sold our MRI machine. Expensive but necessary.
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Logan Stewart
Medical equipment financing is always tricky because the collateral depreciates so fast but the loans are long-term. Lenders get nervous about releasing anything because they know they're already underwater on the collateral value after a year or two.
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Mikayla Brown
•This is so true. Our 3-year-old equipment is probably worth half what we financed it for.
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Sean Matthews
•That's why they use such broad collateral descriptions - they need the entire practice's equipment to feel secure about the loan.
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Ali Anderson
Another approach is to propose a blanket amendment that creates categories - like 'diagnostic equipment over $X value' versus 'general practice equipment under $Y value' where you have more freedom to sell the smaller items. This gives them security on the big ticket items while giving you flexibility on the rest.
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Zadie Patel
•That's actually brilliant. Much better than trying to get individual releases every time you want to sell something small.
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Evelyn Rivera
•I'm going to propose this to our lender. The current blanket lien is just too restrictive for normal business operations.
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A Man D Mortal
Just went through something similar and ended up using that Certana document checking tool someone mentioned. Really helpful for understanding exactly what was covered in our UCC filings versus what we thought was covered. Found several pieces of equipment that weren't actually encumbered because of serial number mismatches in the original filing.
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Declan Ramirez
•Serial number mismatches? How does that happen?
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A Man D Mortal
•Equipment dealers sometimes provide preliminary serial numbers when you're setting up financing, then the actual delivered equipment has different numbers. If the UCC filing uses the wrong numbers, those specific items might not be properly encumbered.
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Emma Morales
•That's a great point. We should probably audit our filings to make sure everything matches up correctly.
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Katherine Hunter
The key is working with the lender rather than around them. Most healthcare lenders understand that practices need to upgrade equipment regularly. If you approach it as a partnership - showing them how the equipment changes improve your ability to service the debt - they're usually more cooperative than if you just demand releases.
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Lucas Parker
•Good advice. We've had success by providing updated financial statements showing how new equipment improved our revenue.
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Donna Cline
•Also helps to show them depreciation schedules demonstrating that older equipment has minimal collateral value anyway.
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Evelyn Rivera
•Thanks everyone for the advice. I'm going to start with a comprehensive review of what's actually covered and then approach the lender with a specific proposal for categories rather than trying to get individual releases.
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