UCC 9 301 proper filing location causing equipment lien complications

We did file a UCC-3 amendment in March 2024 to add some additional equipment to the collateral schedule. That was about 6 months after they incorporated in Delaware. Does that mean the amendment might be invalid?

That could be problematic. UCC 9 301 generally requires filings to be made in the state where the debtor is 'located' which for corporations means their state of incorporation. If they incorporated in Delaware in late 2023 and you filed the amendment in Texas in 2024, that amendment might not be properly perfected.

Four months? We definitely missed that window if they incorporated in Delaware in 2023. So our March 2024 amendment in Texas would be ineffective?

The four month rule applies to maintaining continuous perfection when a debtor changes location. Your original filing doesn't become invalid, but any new filings or amendments after the grace period need to be in the new jurisdiction. You should definitely get a Delaware UCC-1 filed ASAP to cover the amended collateral.

Actually I think there's some confusion here about UCC 9 301. The four month rule is for when the collateral moves, not when the debtor reincorporates. For corporate debtors, it's about where they're legally organized, not where their assets are located.

That sounds useful. How does it work with UCC 9 301 location requirements? Does it actually check filing jurisdictions or just document consistency?

It checks both. You upload the corporate charter and your UCC filings and it will flag if there's a mismatch between the debtor's state of organization and where you filed. Really straightforward - just drag and drop the PDFs and it analyzes everything automatically.

Good point. I need to pull their Delaware filing date. We definitely didn't get notice of the reincorporation which seems like it should violate their loan covenants.

Definitely check your loan documents for change of domicile provisions. Most commercial loans require borrower notification for exactly this reason.

Even if they violated loan covenants, that doesn't fix your UCC 9 301 perfection issue. You still need to address the Delaware filing requirement for any amendments made after their reincorporation.

LLC to corporation is different than your situation. For LLCs, UCC 9 301 looks at the state where they're organized, same as corporations. The key is always tracking when the legal entity changes or moves.

But what if they just change their name? Do I need to file amendments for that under UCC 9 301?

These are commercial semi-trucks, not regular passenger vehicles. I believe UCC still applies but you're right that title laws can complicate things. That's another layer I hadn't considered.

Semi-trucks usually fall under UCC unless they're specifically titled as motor vehicles in the state. But with equipment moving between Texas, Oklahoma and Louisiana, you might want to check each state's title laws just to be safe.

Won't that look suspicious if we're already in default proceedings? Like we're trying to cover up a filing mistake?

Not suspicious, just prudent. Lenders file protective UCC-1s all the time when jurisdiction is uncertain. Document your reasoning and file in Delaware ASAP. You can always terminate the Texas filing later if needed.

I agree with filing in Delaware but make sure you get the debtor name exactly right. If they reincorporated, their legal name might have changed slightly which could affect the effectiveness of your filing under UCC 9 301.

That's terrifying. So the March 2024 amendment adding equipment might be completely worthless? We added about $800K in additional trucks to the collateral schedule.

Potentially, yes. But every case is different and depends on the specific timing and circumstances. Get with a good commercial attorney who knows UCC 9 301 inside and out.

Does that tool actually understand the UCC 9 301 location rules or does it just compare document details?

It specifically checks for jurisdictional consistency - debtor organization state versus filing state. Really sophisticated analysis for something so easy to use.

That's definitely possible. The timing seems suspicious now that I think about it. They reincorporated right around when they started missing payments.

If that's the case, you might have fraudulent transfer or preference issues to pursue alongside fixing your UCC 9 301 filing problems. Definitely lawyer territory at this point.

Fraudulent transfer might be a stretch but the Delaware incorporation could definitely be seen as an attempt to impair your security interest if they didn't notify you as required under the loan agreement.

Just reincorporated for legal reasons as far as I know. All their operations, equipment, and management are still in Texas. Only the corporate charter moved to Delaware.

That's pretty common but it still triggers UCC 9 301 location change requirements. Delaware incorporation with Texas operations is classic but you still need to follow Delaware filing rules for the corporate entity.

Thanks, that's the most practical advice yet. I'll get our attorney to handle the Delaware filing immediately. Better safe than sorry with this much money on the line.

Smart move. And document everything about when you discovered the Delaware incorporation so you have a paper trail showing you acted promptly once you knew about the UCC 9 301 issue.