Confused about what does article 9 of the ucc cover - equipment financing situation

This is right but don't forget about fixtures - some manufacturing equipment might be considered fixtures if it's permanently attached to real estate. That could complicate things.

Oh great, another wrinkle I didn't think about. How do I tell if equipment is a fixture or not?

So if my debtor is incorporated in Delaware but the equipment is in Ohio and Michigan, I file in Delaware?

Exactly. Debtor's jurisdiction of organization for entities, chief executive office for individuals. Equipment location doesn't matter for filing location.

Unless it's fixtures, then you file where the real estate is located.

Never heard of that tool - it actually checks document consistency? That sounds like exactly what I need.

Yeah you just upload PDFs and it cross-checks everything - debtor names, collateral descriptions, all that stuff. Caught mistakes I never would have seen manually.

Interesting, might have to check that out. I'm always paranoid about missing something in these filings.

Wait, so the UCC-1 filing isn't what creates the security interest?

Nope, filing just perfects it. The security agreement creates it. Three requirements for attachment - agreement, value given, debtor has rights in the collateral.

This is why I hate Article 9. So many moving parts and if you mess up one thing the whole deal falls apart.

Probably" fine'isn t exactly reassuring when'we re talking about $850K incollateral...

Fair point. Just saying don't get paralyzed by all the technical details. Focus on the basics first.

What's the weirdest collateral you've had to deal with?

Had a client try to take a security interest in a trademark once. Technically possible under Article 9 but the perfection rules are complicated.

I've seen someone try to perfect a security interest in a racehorse. That was fun to research.

Because commercial transactions are complicated. You need rules to handle conflicts between multiple lenders, different types of collateral, changing circumstances.

I get that but does it have to be THIS complicated? I swear they make it confusing on purpose.

Try dealing with the old pre-2001 version if you want to see complicated. Current Article 9 is actually much cleaner.

This is exactly the kind of detail I was worried about missing. The credit line does revolve so I need to make sure that's covered.

Yeah and don't forget about UCC-3 continuations if this is a long-term deal. You'll need to file those before the five-year mark.

Vehicles are usually covered by certificate-of-title laws, not Article 9. But it depends on the type of vehicle and whether it's titled in that state.

Thanks, that's what I thought but wasn't sure.

Good thing our equipment isn't vehicles then. One less thing to worry about.

That's terrifying. How do you even tell what's a fixture vs equipment?

It's a facts-and-circumstances test - how attached is it, was it intended to be permanent, would removing it damage the building. When in doubt, file both ways.

The fixture vs equipment distinction is one of the most litigated areas in Article 9. Better safe than sorry.

So for my equipment deal, UCC-1 filing is the right perfection method?

For equipment, yes. But if you're also taking inventory or accounts receivable, same UCC-1 can cover all of it if described properly.

That's what I was hoping. One filing to rule them all.

Just make sure your debtor name is exactly right. I've seen filings become worthless because of typos in the debtor name.