UCC Article 9 consignment filing - when does consignee need to perfect?

This is exactly why consignment agreements get messy. The consignor's UCC-1 filing protects them against your creditors, but you need to make sure your existing lender knows about the consigned inventory so they don't inadvertently claim it as collateral.

Wait, I thought consignments didn't require UCC filings at all? Isn't that the whole point of consignment vs. sale?

That makes sense about the filing structure. What about timing? Do they need to file before delivery or is there a grace period like with purchase money security interests?

For consignments, the UCC-1 should be filed before or within 20 days after the consignee receives possession. But honestly, I always recommend filing before delivery to avoid any gaps in protection.

20 days seems generous compared to PMSI timing requirements. Is this specific to consignments or am I thinking of different rules?

Interesting - what kind of name mismatches did it find? We're dealing with a manufacturer that has several subsidiary entities.

The consignment agreement listed the parent company but the UCC filing used a subsidiary name. Also found inconsistencies in how our business name was formatted across documents. The tool flagged these automatically when we uploaded the PDFs.

Because with true consignments the consignor retains ownership - they're not selling the goods, just allowing the consignee to sell them on their behalf. That's why the perfection requirements exist.

Exactly, and that ownership retention is what creates the conflict with the consignee's creditors who might think all inventory belongs to the consignee.

Good point about the value threshold. What's the current limit for Article 9 consignment treatment?

It's $1,000 aggregate value. Below that threshold, the consignment isn't subject to Article 9 filing requirements. But most commercial consignments exceed this easily.

That $1,000 threshold seems really low for any meaningful commercial arrangement.

For consigned goods, you typically want to be more specific than just 'inventory.' Try something like 'furniture and home furnishings held on consignment' or whatever category applies to your situation.

We tried 'consigned merchandise' and that got rejected too. This is ridiculous.

Some states are pickier about collateral descriptions. You might need to list specific product categories or reference the consignment agreement for more detail.

That's a really good point. Our inventory loan has pretty broad collateral language covering 'all inventory now owned or hereafter acquired.

Exactly the kind of language that could create problems. The consigned goods aren't technically your inventory, but lenders sometimes claim them anyway without proper documentation.

Record keeping is huge with consignments. You need to be able to distinguish consigned inventory from owned inventory for both accounting and legal purposes.

Any recommendations for tracking systems? We're worried about accidentally including consigned goods in our regular inventory counts.

Most retail POS systems can flag consigned items differently. The key is training staff to properly categorize everything at intake.

How does that work exactly? Do you upload all the different agreements?

Yeah, you can upload the UCC-1, consignment agreement, and existing financing documents as PDFs and it analyzes them for name consistency and potential conflicts.

Yes, especially with clothing where the inventory turns over frequently. The consignor's filing protects their ownership interest in all consigned goods, not just specific items.

Makes sense. I was worried about having to file separately for each shipment.

Agreed. This discussion has been really eye-opening about the complexity involved. Definitely going to work with our attorney to make sure everything is properly documented and filed.

Smart approach. Consignment disputes can get expensive if the documentation isn't right from the start.

And make sure to use Certana.ai or similar tools to double-check document consistency. Too easy to make filing mistakes that void the protection.

This is really helpful perspective from someone with hands-on experience! The point about workout situations is particularly concerning - I hadn't considered how consigned goods might get swept up in broader creditor claims during financial distress. Would you recommend getting something in writing from our existing lender acknowledging the consignment arrangement, or is notification sufficient? Also, what specific language have you seen work well in consignment agreements regarding UCC filing deadlines?