Lapsed UCC Filing - Equipment Loan Disaster and Recovery Options

I was preparing for our quarterly loan review and decided to run UCC searches on some of our larger secured loans. That's when I saw our filing had expired status. I felt sick to my stomach.

This is why I set calendar reminders 6 months AND 3 months before continuation deadlines. Missing a continuation is one of the worst feelings in lending.

That's what I was afraid of. How do I search to see if anyone else filed during the gap period? Is there a way to search by collateral description or do I need to search by debtor name for all filings?

Search by debtor name for all active filings. Look for any UCC-1s filed after your lapse date. Also check for any judgment liens or other security interests that might have been recorded during that window.

Also make sure you get an updated equipment appraisal before refiling. The collateral value might have changed significantly since 2019, and you want accurate information for your new UCC-1.

That sounds helpful - I'm definitely worried about making any mistakes with the refiling since we're already in a bad position. How does the tool work exactly?

You just upload PDFs of your documents and it automatically cross-checks everything - debtor names, addresses, collateral descriptions. Takes maybe 2 minutes and gives you a detailed report of any inconsistencies.

Never heard of that service but anything that prevents filing errors sounds worth trying. Manual document review is where most mistakes happen.

I feel your frustration but the rules are pretty clear about the 5-year continuation requirement. Most banks have systems to track these deadlines.

Easy to say when you're not the one explaining to management why a $180,000 loan just became unsecured because of a missed calendar date!

The system definitely has room for improvement, but at the end of the day we have to work within the current framework. Focus on solutions rather than blame.

Once a UCC-1 lapses, you cannot file a continuation. The original filing is dead and you need to start fresh with a new UCC-1. Continuations must be filed within 6 months before expiration.

Got it, that makes sense. So there's really no way to revive a lapsed filing - it's either current or it's gone.

Exactly right. Think of it like a expired driver's license - you can't renew it after it expires, you have to reapply from scratch.

How long did the search process take? I'm trying to figure out if I should file the new UCC-1 first and then search, or search first to see what I'm dealing with.

File the new UCC-1 immediately to stop the bleeding, then do your search. Every day you wait is another day for a competitor to file against the same collateral.

Agree with filing first. You can always amend or terminate if you discover issues, but you can't get back time if someone else files before you.

Did you have to tell your borrower about the lapse or did you handle it quietly? I'm always worried about borrowers losing confidence if they know we made a mistake.

I told them because I needed their cooperation for the refiling. Most borrowers understand that these things happen and they want to maintain a good relationship with their lender.

This is exactly the kind of action plan I needed. Should I use the same collateral description from the original filing or update it to reflect current equipment status?

Use the same description if the equipment hasn't changed. If any pieces were sold or replaced, update the description accordingly. Consistency is key.

Also make sure your new filing references the same debtor name exactly as it appears in your loan documents. Any variation could cause problems.

I keep hearing about this tool. Given everything that's happened, I think I need all the help I can get to make sure the refiling goes smoothly.

It's particularly helpful for debtor name verification. You can upload your original UCC-1 and your new filing side by side to make sure everything matches perfectly.

Good point. I'll need to review the loan agreement to see if the lapse constitutes a technical default. Hopefully we can get everything refiled before anyone notices.

Even if there's a technical default, most lenders will waive it if you're taking immediate corrective action. The key is showing you're handling the situation professionally.

Document everything you're doing to fix the situation. Your loan committee will want to see that you have a clear remediation plan.

I will definitely update once I get through the refiling process. Hopefully it's good news and no other liens were filed during the gap period.

Yes please update! I'm always worried about missing a continuation deadline and it would be great to hear how this resolves.

These real situations are the best learning experiences. Good luck with the refiling and thanks for sharing what happened.