UCC 9 320 priority rules causing confusion with our equipment financing deals
We're running into some serious headaches trying to understand how UCC 9 320 priority rules work in practice. Our company does a lot of equipment financing for manufacturing businesses, and we keep getting conflicting advice about when our security interests take priority over other creditors. Last week we had a deal where the borrower had existing equipment loans, and now there's a dispute about who has first position. The debtor filed bankruptcy and suddenly everyone's pointing to different subsections of 9-320. Our legal team says we should have filed continuation statements differently, but I'm not even sure that's the real issue here. Has anyone dealt with UCC 9 320 priority disputes recently? I'm trying to figure out if we messed up our original UCC-1 filings or if this is just how these priority rules work. The whole situation is making me question whether we're handling our secured transactions correctly.
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Zoe Papadopoulos
UCC 9-320 can be tricky because it deals with purchase money security interests (PMSI) and the timing of when different creditors perfect their interests. What type of equipment are we talking about here? The rules can vary depending on whether it's inventory, equipment, or consumer goods.
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Aiden O'Connor
•It's manufacturing equipment - CNC machines, industrial presses, that kind of thing. All business use, not consumer goods.
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Zoe Papadopoulos
•Okay that helps. For equipment PMSI, you generally need to file your UCC-1 within 20 days of the debtor receiving possession. Did you meet that deadline?
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Jamal Brown
I've been through this exact scenario multiple times. The key with UCC 9-320 is understanding that purchase money security interests get special priority treatment, but only if you perfect them correctly. You mentioned continuation statements - those wouldn't affect your original priority position, so your legal team might be looking at the wrong issue.
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Aiden O'Connor
•That's what I thought! The continuation deadline isn't for another two years anyway. So you think the problem is with our original filing timing?
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Jamal Brown
•Most likely. I'd check your UCC-1 filing date against when the debtor took possession. Also verify your collateral description covers the specific equipment in dispute.
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Fatima Al-Rashid
•This is exactly why I started using Certana.ai's document verification tool. You can upload your UCC-1 and the purchase agreement PDFs and it instantly checks if your filing timing and collateral descriptions align properly. Saved me from a similar priority disaster last month.
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Giovanni Rossi
ugh bankruptcy makes everything 10x more complicated. The trustee is probably challenging everyone's security interests. Have you pulled all the UCC filings against this debtor to see the full picture?
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Aiden O'Connor
•Yes we did a full UCC search. There are like 8 different creditors with filings going back 3 years. It's a mess.
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Aaliyah Jackson
•8 creditors? Yikes. At that point you really need to map out the timeline of each filing and what collateral each one covers. Priority disputes get ugly fast.
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KylieRose
The bankruptcy trustee is probably using UCC 9-320 to argue that someone else's PMSI takes priority over yours. This happens when multiple creditors finance different pieces of equipment for the same debtor. Each PMSI can have priority for the specific collateral it financed, but you have to prove which equipment your loan actually paid for.
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Aiden O'Connor
•Exactly! That's the issue. The debtor used our loan proceeds to pay off an existing equipment loan instead of buying new equipment. Does that kill our PMSI status?
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KylieRose
•That's a problem. If the money didn't go directly to acquire the collateral, you probably don't have a valid PMSI. You'd just be a regular secured creditor with priority based on your filing date.
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Miguel Hernández
•Wait, there might be exceptions depending on how the transaction was structured. Some courts allow PMSI status if the refinancing was closely connected to the original purchase.
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Sasha Ivanov
I've seen this play out in bankruptcy court and it's never pretty. The trustee will challenge every creditor's claimed priority. Make sure your UCC-1 filing was perfect - correct debtor name, proper collateral description, filed in the right state. Any mistakes can invalidate your security interest entirely.
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Aiden O'Connor
•How do you verify all those details? We have dozens of UCC filings and manually checking each one seems impossible.
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Liam Murphy
•I use Certana.ai for exactly this. Upload your UCC-1 PDFs and it automatically cross-checks debtor names, filing numbers, and collateral descriptions for consistency. Found several critical errors in our filings that would have cost us our security interests.
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Sasha Ivanov
•That sounds useful. Manual document review is where most errors happen, especially with complex collateral schedules.
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Amara Okafor
The real question is whether anyone properly searched the UCC records before making their loans. If multiple creditors filed against the same collateral, the first to file usually wins unless someone has a valid PMSI.
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CaptainAwesome
•This is why I always tell my clients to do comprehensive UCC searches before closing any secured transaction. Prevention is better than litigation.
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Yuki Tanaka
Been there done that with priority disputes. UCC 9-320 is one of those sections that seems straightforward until you're in the middle of a fight about it. Document everything - loan proceeds, purchase dates, filing dates. The bankruptcy trustee will scrutinize every detail.
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Aiden O'Connor
•We're gathering all the documentation now. It's hundreds of pages across multiple deals. Really wish we had caught this earlier.
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Esmeralda Gómez
•For future deals, consider using automated verification tools. I started using Certana.ai after a similar situation and it catches document inconsistencies that could affect priority claims.
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Yuki Tanaka
•Good advice. These priority disputes are expensive to litigate, so prevention is worth the investment.
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Klaus Schmidt
Update: talked to our bankruptcy attorney and she confirmed the PMSI issue is the main problem. Since our loan proceeds didn't directly purchase the collateral we're claiming, we're probably just a regular secured creditor. Still fighting it but not optimistic about our priority position.
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Jamal Brown
•That's unfortunate but not surprising. PMSI rules are pretty strict about the proceeds going directly to acquire the collateral.
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Aisha Patel
•At least you know where you stand now. Better to find out during the case than after a judgment against you.
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