UCC 1-208 Amendment Filing - Debtor Name Change Issue

Agree completely. The safe harbor approach is always file the new UCC-1 first, then amend or terminate the old one. Better to have overlapping coverage than a gap, especially with that loan amount.

But doesn't that create potential priority issues if someone else files between your amendment and new filing? I thought the whole point of UCC-3 amendments was to maintain the original priority date.

That's why you file the new UCC-1 FIRST, then terminate the old one. The new filing gets its own priority date, but you don't lose perfection during the transition. It's not about maintaining the original priority - it's about maintaining continuous perfection.

That sounds really helpful. Does it actually simulate the secretary of state search logic to test whether the names would be discoverable?

Yes, it runs the name through various search algorithms to see if there's a reasonable chance a searcher would find your original filing under the new name. Much more reliable than trying to guess whether the change is 'seriously misleading' on your own.

How accurate is that tool though? I mean, every state has different search logic. What works in Delaware might not work in Texas.

Fair point, but it covers the major variations in state search systems. For a $850k loan, the small cost of verification is worth avoiding the risk of losing perfection over a name change issue.

You're thinking of the 4-month rule, but that's for when the change would make the financing statement seriously misleading. If the name change ISN'T seriously misleading, you don't have to file anything. But if it IS seriously misleading, you have 4 months to file an amendment or you lose perfection against subsequent purchasers.

So the question is whether 'ABC Manufacturing Solutions' to 'Advanced Building Components' is seriously misleading. That seems like a pretty big change to me.

The test isn't how big the change looks to us - it's whether a search under the new name would reasonably discover the original filing. Search logic looks at things like common words, abbreviations, punctuation. Sometimes big changes aren't seriously misleading and small changes are.

Tell me about it. And good luck getting a straight answer from most secretary of state offices about their search logic. They act like it's a trade secret.

That's exactly why I always file new UCC-1s for any name change that's more than just punctuation or abbreviation. Not worth the risk of getting it wrong and having to explain to a client why their security interest is no longer perfected.

But then you lose your original priority date. If there are other liens filed between your original UCC-1 and the new one, you could end up subordinate.

That's what I was afraid of. So we definitely need to file something within 4 months of the name change. The question is whether to file a UCC-3 amendment or a new UCC-1.

Given how different the names are, I'd file a new UCC-1. The amendment approach only works if you're confident the amended filing would be discoverable under the new name. With names this different, I wouldn't bet an $850k security interest on it.

Agreed. File the new UCC-1 with the current debtor name, then once it's accepted, terminate the old one. Clean break, no ambiguity.

Good point about bank examiners. They're going to look at this stuff during audits and if they think you took unnecessary risks with perfection, that's not going to go well.

Did you have any issues with the timing? Like, did you file the new UCC-1 immediately when you found out about the name change?

We filed within about 6 weeks of learning about the change. The 4-month rule gives you some breathing room, but I wouldn't wait until the last minute. Too much can go wrong with filings - rejection for wrong form, processing delays, etc.

Good catch. It was described as a 'restructuring' but I should confirm whether that involved any merger or acquisition activity. Could definitely complicate the analysis.

Yeah, if it's a true merger you might need to look at the surviving entity's name and whether your security interest attached to the merged entity automatically. Whole different set of rules.

That's interesting. Did it give you any guidance on timing or just flag the search issue?

It focused on the search discoverability issue, but the system also reminded us about the 4-month rule for seriously misleading changes. Really helpful to have all the relevant deadlines and requirements in one place.

Great point. The collateral is still the same manufacturing equipment, but I should double-check that our description doesn't reference the old company name in any way.

Definitely check that. I've seen collateral descriptions that said something like 'all equipment located at ABC Manufacturing's facility' and then when ABC changed its name, there was ambiguity about whether the description was still accurate.

That's why I always use generic descriptions like 'all equipment' or 'equipment described in attached schedule' rather than tying the description to company-specific references.

Exactly. The cost of a new filing is nothing compared to the risk of losing perfection on an $850k security interest.

And document everything. Keep records of when you learned about the name change, when you filed the new UCC-1, everything. Bank examiners love documentation.

Good choice. Better safe than sorry with UCC perfection issues.

Let us know how it goes! Always good to hear back on how these situations resolve.