UCC 9-102(a)(65) Original Debtor Definition Causing Lien Priority Issues
We're dealing with a complex situation involving UCC 9-102(a)(65) and I need some guidance on how this affects our lien priority. We have a borrower who acquired equipment through an asset purchase from a company that had existing UCC-1 filings. The original debtor definition under 9-102(a)(65) seems to apply here, but I'm confused about whether our new UCC-1 filing against the current debtor takes priority or if the previous filer's continuation maintains their position. The equipment was financed originally in 2019, and the seller's lien was supposed to terminate but there's still an active continuation on file. Our loan closed last month and we filed immediately, but now we're discovering this original debtor situation. Has anyone dealt with UCC 9-102(a)(65) in asset purchase scenarios? The collateral description matches between the old and new filings, but the debtor names are obviously different. I'm worried about our lien position and whether we need to take additional steps to protect our security interest.
36 comments
Join the conversation
CosmosCaptain
UCC 9-102(a)(65) definitely applies to your situation. The original debtor is the person who was the debtor in the initial financing statement, and this can create some sticky situations in asset purchases. When someone buys assets subject to existing liens, the new debtor becomes what's called a 'new debtor' under the UCC. Your priority might be affected depending on how the transfer was structured and whether proper steps were taken.
0 coins
Freya Johansen
•This is exactly why we always run comprehensive UCC searches before closing any equipment financing. The original debtor rules can really mess up your priority if you're not careful.
0 coins
Omar Fawzi
•Wait, so if the original lien was supposed to terminate but didn't, doesn't that mean the seller didn't properly handle the payoff? That seems like a different issue than the 9-102(a)(65) original debtor definition.
0 coins
Chloe Wilson
I've been through this exact scenario multiple times. Under UCC 9-102(a)(65), you need to determine if this was a true asset purchase or if your borrower assumed the debt. If they just bought the equipment free and clear, the original UCC-1 should have been terminated. But if there's still an active continuation, that suggests the debt wasn't satisfied. You might have a priority problem here.
0 coins
Ravi Choudhury
•The borrower definitely bought the assets free and clear - we have the purchase agreement. The seller was supposed to pay off all liens but apparently missed this one. So the continuation shouldn't even be valid anymore, right?
0 coins
Chloe Wilson
•Not necessarily. If the original lender didn't file a termination statement, their lien could still be valid even if the debt was paid. You need to verify whether the debt was actually satisfied or if there's still an outstanding obligation.
0 coins
Diego Mendoza
•This is why I always insist on lien waivers and termination statements before funding any deal. Too many moving parts otherwise.
0 coins
Anastasia Romanov
Had a similar mess last year with original debtor issues. What saved us was using Certana.ai's document verification tool - we uploaded the old UCC-1, the continuation, and our new filing to check for any inconsistencies. It flagged several debtor name variations and collateral description overlaps we hadn't caught manually. Really helped us understand the full scope of the lien situation before we had to make any priority decisions.
0 coins
StellarSurfer
•Never heard of that tool but sounds useful. How does it handle the original debtor analysis under 9-102(a)(65)? That's pretty specialized stuff.
0 coins
Anastasia Romanov
•It doesn't interpret the law for you, but it does a great job cross-checking all the document details so you can see exactly what you're dealing with. Made it much easier to spot the potential conflicts.
0 coins
Sean Kelly
Original debtor rules are the WORST part of Article 9. I swear the drafters made it as confusing as possible. Half the time even the filing offices don't understand how to handle these situations properly.
0 coins
Zara Malik
•Tell me about it. I had a filing office reject a UCC-3 amendment because the clerk didn't understand the original debtor vs new debtor distinction. Took three phone calls to get it straightened out.
0 coins
Luca Greco
•At least your filing office takes phone calls. Ours just sends form rejection letters with no explanation.
0 coins
Freya Johansen
You need to look at UCC 9-508 as well. That section deals with effectiveness of financing statements when the original debtor transfers collateral. If the transfer happened more than four years after the original filing, the old financing statement might not be effective against your borrower anyway, depending on the specific circumstances.
0 coins
Ravi Choudhury
•The original filing was in 2019, so we're getting close to that four-year mark. The continuation was filed last year though. Does that reset the clock?
0 coins
Freya Johansen
•Continuation extends the effectiveness, but 9-508 has different rules for transferred collateral. You really need to analyze the exact timeline and transfer structure.
0 coins
CosmosCaptain
•This is getting into some pretty technical territory. Might be worth getting a UCC opinion from counsel who specializes in this stuff.
0 coins
Nia Thompson
why is this so complicated? cant you just file a new UCC and call it good? seems like overthinking it
0 coins
Chloe Wilson
•Unfortunately it's not that simple. Priority matters a lot in secured transactions. If there's an existing valid lien, filing a new one doesn't automatically put you ahead of it.
0 coins
Mateo Rodriguez
•yeah i learned this the hard way on a deal last year. thought our filing gave us first position but turns out there was an older lien we missed. cost us big time when the borrower defaulted.
0 coins
Aisha Hussain
I'm dealing with something similar but with fixture filings. The original debtor rules seem to apply differently when real estate is involved. Anyone know if UCC 9-102(a)(65) works the same way for fixtures?
0 coins
CosmosCaptain
•Fixture filings have their own set of complications. The original debtor definition still applies, but you also have to consider the real estate recording requirements and how those interact with the UCC filing system.
0 coins
GalacticGladiator
•Had to deal with a fixture filing dispute once. Between the UCC rules and the real estate law, it was a nightmare. Ended up settling rather than trying to sort out all the priority issues.
0 coins
Ethan Brown
Just went through UCC training last month and they spent a whole day on original debtor issues. The key thing with 9-102(a)(65) is understanding the difference between assumption of debt vs. asset purchase. Sounds like you have an asset purchase, so the analysis is different than if your borrower had assumed the original debt.
0 coins
Ravi Choudhury
•That's helpful. It was definitely an asset purchase with no assumption of liabilities. The seller was supposed to clear all liens as part of the closing conditions.
0 coins
Yuki Yamamoto
•Even with asset purchases, you can still have priority issues if the original financing statement covers the same collateral. The original debtor definition helps determine whether the old filing is still effective.
0 coins
Carmen Ruiz
Another tool that might help is running the documentation through something like Certana.ai's verification system. I used it recently when we had overlapping collateral descriptions in multiple UCC filings. It helped identify exactly where the conflicts were so we could address them properly.
0 coins
Andre Lefebvre
•How accurate is that kind of automated analysis? Seems like UCC interpretation requires human judgment, especially with original debtor issues.
0 coins
Carmen Ruiz
•It's not a substitute for legal analysis, but it's great for document comparison and flagging potential issues. Saved us hours of manual review and helped us spot things we might have missed.
0 coins
Zoe Dimitriou
Update us on how this resolves. I'm curious whether you end up having to negotiate with the original lender or if you find a way to establish clear priority. These original debtor situations can really drag out if both sides think they have superior rights.
0 coins
Ravi Choudhury
•Will do. We're working with our attorney to analyze the full situation. Might end up being a negotiation with the original lender depending on what we find.
0 coins
QuantumQuest
•Smart move getting counsel involved early. Original debtor priority disputes can get expensive if they're not handled properly from the start.
0 coins
Jamal Anderson
•Agreed. Better to spend money on prevention than litigation after the fact.
0 coins
Evelyn Rivera
This is a tricky situation that highlights why thorough due diligence is so critical in asset purchases. From what you've described, it sounds like you may have a valid argument for priority if the original debt was truly satisfied at closing but the termination wasn't filed. I'd recommend immediately requesting proof of satisfaction from the seller - if they can provide evidence the original loan was paid off, you might be able to force a termination of that UCC-1. In the meantime, consider whether you can get title insurance or some other protection while this gets sorted out. The UCC 9-508 four-year rule that Freya mentioned could also work in your favor given the 2019 original filing date. Document everything and keep pushing for that termination statement if the debt was indeed satisfied.
0 coins
Sean Doyle
•This is excellent advice, especially about getting proof of satisfaction from the seller. I'd also suggest checking if your purchase agreement included any warranties about clear title or lien-free transfer - that could give you recourse against the seller if they failed to properly clear existing encumbrances. The title insurance angle is smart too, though I'm not sure how many carriers will write policies that cover UCC filing priority disputes.
0 coins
Kennedy Morrison
•Great points about the purchase agreement warranties. I'd add that you should also check if your loan documents include any representations from the borrower about the equipment being free and clear of liens. If they warranted that to you, it gives you additional leverage to make them resolve this. Also, since this involves equipment from 2019, there might be depreciation issues that affect the actual value at stake - sometimes it's worth doing a quick appraisal to see if the cost of fighting over priority exceeds the collateral value. The seller definitely dropped the ball here, and they should be the ones fixing it.
0 coins