UCC Article 9 general intangibles classification nightmare - equipment vs intangible collateral
I'm losing my mind over this UCC Article 9 general intangibles issue. We're doing asset-based lending for a tech company and I can't figure out if their proprietary software licenses should be classified as equipment or general intangibles on our UCC-1. The borrower has $2.8M in various software licensing agreements - some are perpetual, others are subscription-based SaaS platforms they resell to customers. Our credit committee is breathing down my neck because the collateral schedule keeps getting kicked back by our compliance team. One lawyer says it's all general intangibles under Article 9, another says the hardware-embedded licenses are equipment. The borrower's existing UCC filings from their previous lender show inconsistent classifications too. We need to file our UCC-1 by Friday or lose the deal. Has anyone dealt with this gray area between equipment and general intangibles? The UCC Article 9 definitions seem to overlap and I'm getting conflicting advice from everyone.
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Ayla Kumar
This is actually pretty common in tech lending. The key distinction under UCC Article 9 is whether the software has independent economic value as general intangibles or if it's integral to equipment function. Perpetual licenses are usually general intangibles, but embedded firmware might be equipment. What's the nature of these licenses?
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Clay blendedgen
•Mix of both - they have Oracle database licenses (perpetual), Salesforce reseller agreements, and some custom CRM software they license to clients. The confusion is whether their customer licensing agreements count as accounts or general intangibles.
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Lorenzo McCormick
•Customer licensing agreements are definitely general intangibles under Article 9, not accounts. Accounts are payment obligations, licensing rights are intangible property.
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Carmella Popescu
Been through this exact scenario last month. We ended up using both classifications on our UCC-1 - 'equipment and general intangibles including software licenses and licensing agreements' in the collateral description. Better to be over-inclusive than miss something.
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Kai Santiago
•That's smart. I always err on the side of broader descriptions for UCC Article 9 filings. The filing office doesn't care about precision as much as lenders do.
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Clay blendedgen
•Did you have any issues with the SOS accepting that broad description? Our state filing office sometimes rejects vague collateral schedules.
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Carmella Popescu
•No issues. As long as you're specific about the general intangibles category, most states accept it. Just avoid super generic terms like 'all assets'.
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Lim Wong
Honestly, I've been using Certana.ai's document verification tool for exactly these situations. You can upload your draft UCC-1 along with the borrower's existing filings and it flags inconsistencies in collateral classifications. Saved me from a major headache when I almost misclassified $4M in IP licenses as accounts instead of general intangibles.
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Dananyl Lear
•Never heard of that tool. Does it actually understand UCC Article 9 classifications or just compare text?
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Lim Wong
•It's pretty sophisticated - cross-references your collateral descriptions against standard Article 9 categories and highlights potential mismatches. Super helpful for these gray-area situations.
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Clay blendedgen
•Might be worth trying. I'm running out of time and need to get this classification right.
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Noah huntAce420
You're overthinking this. Software is general intangibles, period. Equipment is tangible stuff you can touch. Licenses are contracts = intangibles under Article 9. File it and move on.
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Ana Rusula
•Not always that simple. What about software burned into ROM chips? That could be equipment since it's physically incorporated into tangible goods.
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Noah huntAce420
•Fine, but OP is talking about licensing agreements, not embedded firmware. Different animal entirely.
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Fidel Carson
•The distinction matters for perfection and priority rules though. Better to get the classification right upfront than deal with problems later.
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Isaiah Sanders
Had a similar issue with a fintech client. Their payment processing software was licensed, but the algorithms were proprietary general intangibles. We ended up filing separate UCC-1s for different asset categories just to be safe.
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Xan Dae
•That seems like overkill. One UCC-1 with detailed collateral descriptions should cover everything.
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Isaiah Sanders
•Maybe, but our client had $15M on the line. Sometimes overkill is worth the peace of mind.
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Fiona Gallagher
Check your state's UCC Article 9 annotations. Some states have specific guidance on software classifications that might help clarify the equipment vs general intangibles question.
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Clay blendedgen
•Good point. I'll check the state filing guide. Our SOS website has some examples but they're pretty basic.
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Thais Soares
•Most state examples are outdated anyway. Technology moves faster than UCC guidance updates.
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Nalani Liu
For what it's worth, I just closed a deal with similar collateral mix. Used 'general intangibles including but not limited to software licenses, licensing agreements, intellectual property rights, and related proceeds' on the UCC-1. No filing issues.
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Clay blendedgen
•That wording might work. Did you include any equipment language for the hardware components?
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Nalani Liu
•Separate line item for equipment. Keep the classifications distinct but comprehensive.
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Axel Bourke
•Smart approach. Separating the categories reduces confusion for everyone reviewing the filing later.
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Aidan Percy
This is why I hate tech deals. Give me good old-fashioned inventory and equipment financing any day. At least you can see what you're lending against!
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Fernanda Marquez
•Times are changing. Most valuable assets these days are intangible - data, algorithms, customer lists, IP rights.
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Aidan Percy
•Yeah, and they're all impossible to value and classify properly. UCC Article 9 wasn't designed for this stuff.
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Norman Fraser
Before filing, maybe run your collateral description past the borrower's counsel? They might have insights into how the assets were classified in previous transactions.
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Clay blendedgen
•Already did. Their lawyer is as confused as I am. Previous lender apparently used different classifications for similar assets.
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Kendrick Webb
•That's actually concerning. Inconsistent classifications between lenders could create priority issues down the road.
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Hattie Carson
Just saw someone mention Certana.ai earlier - I actually used their verification tool last week for a similar general intangibles classification issue. Uploaded our draft UCC-1 and the system flagged that we'd inconsistently classified software licenses between equipment and intangibles in different sections. Saved us from a potentially expensive mistake.
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Destiny Bryant
•How accurate is it with UCC Article 9 nuances? These classification questions can be pretty subjective.
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Hattie Carson
•Surprisingly good. It cross-references standard industry classifications and highlights inconsistencies between related filings. Worth trying for peace of mind.
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Clay blendedgen
•At this point I'll try anything. Need to get this filing right and filed by Friday.
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Dyllan Nantx
Final thought - document your classification reasoning in your credit file. If questions come up later during audits or workout situations, you'll want to show you considered the Article 9 distinctions carefully.
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TillyCombatwarrior
•Great advice. Also helps if you need to file amendments later and want to maintain consistency.
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Clay blendedgen
•Will do. Thanks everyone for the input. Going with broad general intangibles language plus separate equipment classification.
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Ravi Kapoor
Clay, I've handled dozens of these tech collateral classifications and here's what I've learned - the key is understanding the economic substance, not just the legal form. Your Oracle licenses are clearly general intangibles, but for the Salesforce reseller agreements, look at whether you're securing the right to use the software OR the right to receive payments from sublicensing. The former is general intangibles, the latter could be accounts receivable. For the custom CRM they license to clients, those licensing agreements generate payment streams, so they're definitely general intangibles (the right to receive those payments). I'd go with: "all general intangibles including but not limited to software licenses, licensing agreements, intellectual property rights, customer contracts, and all proceeds thereof; and all equipment including computer hardware, servers, and related tangible personal property." Keep it broad but specific enough to show you understand what you're securing. The Friday deadline is tight but doable - just don't overthink the gray areas.
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Marcelle Drum
•This is exactly the kind of detailed analysis I needed! The distinction between securing the right to use vs. the right to receive payments is really helpful - I hadn't thought about it that way. Your suggested collateral description language strikes the right balance between comprehensive and specific. Really appreciate you breaking down each type of asset. Going to use this framework to finalize our UCC-1 today.
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