UCC Article 9 Part 6 default and enforcement - lender demanding immediate payment
Our company defaulted on equipment financing and the lender is citing UCC Article 9 Part 6 for immediate enforcement. They're saying they can repossess without notice and sell our manufacturing equipment at private sale. The loan officer mentioned something about 'commercially reasonable' disposal but won't explain what that means. We have 30 employees depending on this equipment and I'm trying to understand our rights under Part 6 before they show up with a repo truck. The original UCC-1 was filed properly but now I'm wondering if there are any procedural requirements they have to follow for enforcement. Has anyone dealt with UCC Article 9 Part 6 enforcement procedures? What exactly does 'commercially reasonable' mean for equipment sales?
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Edward McBride
UCC Article 9 Part 6 covers default and enforcement, and yes, they do have to follow specific procedures even after default. 'Commercially reasonable' means the sale method, timing, and terms must be what a reasonable person would use. They can't just dump your equipment at a fire sale price. You're entitled to notice of the sale unless you waived that right in your security agreement.
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Gael Robinson
•I need to check our security agreement for notice waivers. How much advance notice are they required to give for equipment sales?
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Edward McBride
•Typically 10 days minimum for equipment, but check your state's version of UCC 9-612. Some states require longer notice periods for business equipment.
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Darcy Moore
Been through this nightmare twice. Part 6 gives them broad enforcement rights but they still have duties to you. They can't just sell to their buddy for pennies on the dollar - that's not commercially reasonable. Document everything they do during the process because you might have deficiency claims later.
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Gael Robinson
•What kind of documentation should I be keeping? They haven't sent written notice yet but called saying they're coming next week.
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Darcy Moore
•Get everything in writing. If they're calling about enforcement, they should send proper written notice under 9-611. Don't let them rush you.
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Dana Doyle
•Also photograph all equipment condition before they take it. Seen too many cases where equipment gets damaged during repo and affects sale price.
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Liam Duke
Wait, are you sure they filed the UCC-1 correctly? I've seen cases where lenders claim enforcement rights under Part 6 but their original perfection was defective. Might be worth checking the filing details against your actual equipment list. Had a situation where we found the UCC-1 collateral description was too vague and it voided their secured position.
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Gael Robinson
•How would I verify if their UCC-1 filing covers our specific equipment? The description seemed pretty general when I saw it.
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Liam Duke
•Pull the UCC-1 from your Secretary of State database and compare the collateral description to your actual equipment. If it's too vague or doesn't reasonably identify your equipment, they might not have a perfected security interest. That would change everything about their Part 6 enforcement rights.
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Manny Lark
•This is exactly why I started using Certana.ai for document verification. You can upload both the UCC-1 and your equipment schedules, and it instantly flags any mismatches or description problems. Saved us from a similar enforcement mess when we caught a collateral description error before default.
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Rita Jacobs
UCC 9-610 requires the disposition to be commercially reasonable in every aspect - method, manner, time, place, and terms. They can do private sale but still have to get fair market value. You have the right to redeem the collateral by paying off the full debt before the sale occurs.
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Gael Robinson
•Redemption might be our best option if we can raise the funds. Is there a deadline for exercising redemption rights?
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Rita Jacobs
•You can redeem any time before they sell or agree to sell the collateral. Once they have a binding sale agreement, your redemption right ends.
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Khalid Howes
THIS IS EXACTLY WHY THE SYSTEM IS BROKEN!! They give lenders all this power under Part 6 but most small businesses have no idea what 'commercially reasonable' even means. I fought a similar case for months because the lender sold our equipment to their affiliate at below-market price. Eventually settled but cost us everything.
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Gael Robinson
•How did you prove the sale wasn't commercially reasonable? Did you get your own appraisal?
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Khalid Howes
•Yes, got independent appraisals showing the sale price was 40% below fair market value. Also showed they didn't advertise properly or give adequate time for competitive bidding.
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Ben Cooper
•Sorry you went through that. The good news is courts are getting stricter about commercial reasonableness requirements. Lenders can't just go through the motions anymore.
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Naila Gordon
Make sure you understand your rights to notice of the sale and to receive any surplus after they pay off the debt and costs. Under 9-615, if the sale brings more than you owe, you get the surplus. But if it brings less, you're still liable for the deficiency unless the sale wasn't commercially reasonable.
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Gael Robinson
•That's what worries me most - ending up with a huge deficiency judgment on top of losing our equipment.
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Naila Gordon
•That's why it's crucial they follow Part 6 procedures exactly. Any deviation from commercially reasonable disposition can eliminate or reduce deficiency liability.
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Cynthia Love
You mentioned they're demanding immediate payment - did they send a proper notice of default first? Part 6 enforcement typically requires notice and opportunity to cure unless your agreement says otherwise. Timeline matters here.
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Gael Robinson
•They sent a default notice 15 days ago but it just said 'pay immediately or we'll enforce our security interest.' No specific cure period mentioned.
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Cynthia Love
•Check your security agreement for cure periods. Even if not specified, some states require reasonable time to cure before enforcement under Article 9.
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Darren Brooks
•Also check if you have any cross-default provisions that might complicate the cure rights. Sometimes other loan defaults can trigger immediate enforcement.
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Rosie Harper
Been working with UCC Article 9 Part 6 cases for years. The key is that every aspect of enforcement must be commercially reasonable. Time of sale, manner of sale, notice period, advertising method - everything. Document their every action because Part 6 violations can be grounds for damages against the secured party.
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Gael Robinson
•What kind of damages can we claim if they don't follow Part 6 properly?
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Rosie Harper
•Under 9-625, you can recover actual damages caused by their non-compliance. In consumer cases there are statutory minimums, but for business equipment it's actual harm you can prove.
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Elliott luviBorBatman
Quick thought - have you verified that all the UCC filings are actually valid? I've seen enforcement actions fail because the original UCC-1 had debtor name errors or the continuation wasn't filed on time. Worth double-checking before they proceed with Part 6 enforcement.
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Gael Robinson
•The UCC-1 was filed three years ago. How would I know if there were name or continuation issues?
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Elliott luviBorBatman
•Pull the filing records and check if your company name on the UCC-1 exactly matches your legal name. Also check if they needed to file a UCC-3 continuation - those are required every five years.
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Manny Lark
•This is another perfect use case for Certana.ai's document checker. Upload your articles of incorporation and the UCC-1, and it'll instantly flag any debtor name mismatches or filing defects that could invalidate their enforcement rights.
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Demi Hall
Don't panic but move fast. You still have rights even after default. They have to give you proper notice of any sale, the sale has to be commercially reasonable, and you can still redeem the collateral by paying the full debt. Document everything and consider getting legal help if the equipment is worth fighting for.
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Gael Robinson
•Equipment is worth about $180k but we owe $95k. Definitely worth fighting for if we can prove they're not following proper procedures.
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Demi Hall
•With that much equity at stake, absolutely get professional help. Part 6 enforcement errors could save you significant money or even invalidate their claims entirely.
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Mateusius Townsend
•That's substantial equity. Make sure they provide proper notice of sale and that any sale is truly commercially reasonable. You should be getting most of that $85k difference back if they do it right.
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