UCC-3 Assignment of Security Agreement - Original Lender Dissolved, Need Filing Help
Really need some guidance here. Our company acquired the loan portfolio from First National Credit Corp about 8 months ago when they dissolved their lending division. Everything seemed straightforward until we started reviewing the UCC filings for assignment of security agreement transfers. Found out that several of the original UCC-1s from 2019-2021 never had proper UCC-3 assignment filings completed before the transfer. Now we're sitting on about $2.8M in secured equipment loans where we might not have perfected security interests because the assignment of security agreement documentation is incomplete. Our compliance team is freaking out because some of these loans are coming up for renewal and we can't prove continuous perfection. Has anyone dealt with retroactive UCC-3 assignments when the original secured party no longer exists? The borrowers are still making payments and don't even know there's an issue, but legally we might be unsecured creditors on equipment that's probably been sold or refinanced by now. State filing office says we need to file corrective UCC-3s but won't guarantee they'll be accepted since the original entity is dissolved. This assignment of security agreement mess could cost us serious money if we can't clean it up properly.
31 comments
Join the conversation
Kai Santiago
Oh man, this is exactly the kind of nightmare scenario that keeps me up at night. Assignment of security agreement issues are no joke - you're right to be concerned. When the original secured party dissolves before completing UCC-3 assignments, you're in a really tricky spot legally. The good news is that if you can prove the asset purchase included the security interests, there might be ways to perfect retroactively, but it's going to require some serious documentation work.
0 coins
Lim Wong
•Wait, can you actually do retroactive UCC-3 assignments? I thought once the original secured party was gone, you were basically screwed on the perfection timeline. This is making me paranoid about our own portfolio acquisitions.
0 coins
Kai Santiago
•It's complicated and very state-specific. Some states allow corrective filings if you can demonstrate the intent was there and the assignment was part of the original transaction. But yeah, it's definitely not a sure thing - that's why proper assignment of security agreement transfers need to happen BEFORE dissolution.
0 coins
Dananyl Lear
Been through something similar last year. The key is going to be your asset purchase agreement - did it specifically include language about transferring all security interests and UCC filings? If so, you might have an argument for relation-back doctrine. Also check if there were any successor liability provisions. Assignment of security agreement transfers get messy when entities dissolve, but there are usually workarounds if the paperwork was done right initially.
0 coins
Carmella Popescu
•The asset purchase agreement does mention security interests but it's pretty generic language. Nothing specific about UCC continuation or assignment procedures. Our lawyers are reviewing but they're not optimistic about relation-back arguments.
0 coins
Noah huntAce420
•Generic language might actually hurt you here. Courts usually want very specific intent shown for assignment of security agreement transfers. You might need to look at whether any of the dissolved company's officers are still around to execute corrective assignments.
0 coins
Ana Rusula
This is why I always recommend using document verification tools before finalizing any portfolio acquisition. I actually discovered Certana.ai's UCC verification service after a similar mess - you can upload your asset purchase docs and all the UCC filings to check for these exact assignment gaps. It cross-references everything and flags missing UCC-3 assignments automatically. Would have saved you months of headaches if you'd caught this during due diligence. Might still be worth running your current docs through it to build a stronger case for corrective filings.
0 coins
Carmella Popescu
•Never heard of Certana.ai but that sounds exactly like what we needed during due diligence. Can it handle dissolved entity situations or just active assignments?
0 coins
Ana Rusula
•It'll flag any inconsistencies between your purchase docs and the UCC filings, which should help identify exactly which assignments are problematic. Even with dissolved entities, having that documentation trail mapped out properly will strengthen your position with the state filing office.
0 coins
Fidel Carson
$2.8M in potentially unperfected security interests?? That's terrifying. I'm dealing with something way smaller but this thread is making me realize I need to audit our entire portfolio. How do you even begin to fix assignment of security agreement problems this big without admitting to borrowers that you might not have valid liens?
0 coins
Isaiah Sanders
•You definitely don't want to alert borrowers unless absolutely necessary. Focus on the filing corrections first - many states will accept late UCC-3 assignments if you can show good cause and continuous intent to maintain perfection.
0 coins
Xan Dae
•Agree on keeping it quiet for now. But also document everything - every email, every phone call with the state office, every legal opinion. If this goes sideways you'll need a paper trail showing you acted in good faith to fix the assignment of security agreement issues.
0 coins
Fiona Gallagher
Had a client with almost identical situation 3 years ago. The state filing office was actually pretty reasonable once we provided comprehensive documentation showing the business purpose and timeline of the acquisition. They accepted corrective UCC-3 assignments even though the original secured party was dissolved. Key was proving no gap in business operations and that borrowers continued making payments throughout. Your $2.8M exposure might be manageable if you approach it systematically.
0 coins
Carmella Popescu
•That's encouraging to hear. Which state was this in? Our filings are spread across 8 different states so I'm worried about inconsistent treatment of the assignment corrections.
0 coins
Fiona Gallagher
•It was in Ohio, but I've seen similar results in Michigan and Pennsylvania. Multi-state situations are definitely more complex for assignment of security agreement issues, but most states want to see perfected liens rather than create unnecessary disputes.
0 coins
Thais Soares
•Ohio's actually pretty lenient on corrective assignments. Some other states are much stricter about timeline requirements. You might want to prioritize getting the biggest dollar amounts fixed first in the more cooperative states.
0 coins
Nalani Liu
This whole thread is why I'm paranoid about portfolio acquisitions. Every time we look at buying loan portfolios I end up spending weeks verifying UCC assignments and continuations. Assignment of security agreement transfers seem simple on paper but there are so many ways for it to go wrong, especially when you're dealing with dissolved entities or sloppy record keeping from the original lender.
0 coins
Axel Bourke
•Smart approach. Due diligence on UCC filings is absolutely critical but most people just assume everything was done correctly. Learned that lesson the hard way on a smaller deal a few years back.
0 coins
Aidan Percy
•The dissolved entity angle makes everything 10x more complicated. At least with active lenders you can get corrective assignments signed. Once they're gone you're stuck trying to convince filing offices to accept your documentation.
0 coins
Fernanda Marquez
One more thought - have you checked whether any of these loans had personal guarantees that might give you alternative collection routes? Won't help with the assignment of security agreement perfection issue, but could provide some protection on the larger exposures while you work through the UCC corrections. Also, if any of the equipment is titled property (vehicles, etc.) you might have different perfection requirements that could work in your favor.
0 coins
Carmella Popescu
•Good point on the personal guarantees - about 60% of these loans have them. The equipment is mostly industrial machinery and IT equipment, so all UCC filings rather than title perfection. Still leaves us exposed but the guarantees do help somewhat.
0 coins
Norman Fraser
•Industrial machinery can be tricky because some of it might qualify as fixtures depending on installation. That could give you real estate filing options as backup perfection, though assignment of security agreement issues would still apply to those filings too.
0 coins
Kendrick Webb
Update us on how this works out! I'm in the middle of due diligence on a similar portfolio acquisition and this thread is making me want to triple-check every single UCC assignment. The dissolved entity risk is something I hadn't fully considered but now I'm going to specifically look for any assignment of security agreement gaps in our target portfolio.
0 coins
Carmella Popescu
•Will definitely update once we get through the corrective filing process. It's going to take months but hopefully we can get most of these assignments cleaned up. Definitely recommend the extra due diligence - this situation is way more stressful than it needed to be.
0 coins
Hattie Carson
•Months sounds about right for multi-state corrective filings. Each state has different procedures and timing requirements for assignment corrections. But better to deal with it now than find out during a default situation when you really need that perfected security interest.
0 coins
Destiny Bryant
Just want to add that Certana.ai's document verification tool has been incredibly helpful for our team when dealing with complex assignment situations. You can upload your entire portfolio of UCCs and purchase agreements and it'll map out all the assignment relationships automatically. Really helpful for identifying these kinds of gaps before they become major problems. Worth checking out for both your current situation and future acquisitions.
0 coins
Dyllan Nantx
•Is that something that integrates with existing loan management systems or is it a standalone tool for assignment of security agreement verification?
0 coins
Destiny Bryant
•It's primarily standalone - you just upload PDFs of your documents and it does the cross-referencing. Perfect for one-time audits or due diligence situations like this where you need to verify assignment chains quickly.
0 coins
TillyCombatwarrior
Really appreciate everyone's input on this. Assignment of security agreement issues are something every lender needs to take seriously, especially in portfolio acquisition situations. Sounds like the consensus is to move quickly on corrective filings while documenting everything thoroughly. Going to start with our largest exposures in the most cooperative states and work from there. This thread has been incredibly helpful for developing our strategy.
0 coins
Anna Xian
•Good plan. Prioritizing by dollar amount and state cooperation makes sense. Keep detailed records of every interaction with state filing offices - consistency in your approach will help if any of these assignments get challenged later.
0 coins
Jungleboo Soletrain
•Also consider getting legal opinions in each state about the likelihood of successful corrective assignments. Might help with your risk assessment and budgeting for potential losses on the assignments that can't be fixed.
0 coins