UCC Filing Complications When Bailee Holds Collateral - Name Mismatch Issues
Running into a frustrating situation with our UCC-1 filing where we have a bailee ucc arrangement. The collateral (construction equipment) is being held by a third-party storage facility (the bailee) but our debtor's name on the original loan documents doesn't exactly match what's showing up on the bailee's warehouse receipts. The bailee has the equipment listed under "Johnson Construction LLC" but our loan paperwork shows "Johnson Construction, LLC" with the comma. Our lender is saying this could create perfection issues since the bailee ucc filing needs to reference the exact debtor name. Has anyone dealt with this kind of name discrepancy in bailee situations? We're worried about our security interest not being properly perfected if we file the UCC-1 with the wrong variation of the name. The equipment is worth $180K so we can't afford to mess this up.
35 comments
Join the conversation
Zainab Ibrahim
This is actually more common than you'd think in bailee ucc situations. The key is determining which version of the debtor name is the "true" legal name according to your state's UCC Article 9 rules. You'll want to check the debtor's formation documents (articles of incorporation, LLC operating agreement, etc.) to see the exact legal name as registered with the Secretary of State.
0 coins
Miguel Castro
•That makes sense. I'll pull the LLC formation docs to verify the official name. Do you know if the bailee's warehouse receipts need to match exactly, or is it more about what we put on the UCC-1?
0 coins
Zainab Ibrahim
•The UCC-1 is what matters for perfection. The bailee's internal records can have variations as long as your financing statement uses the correct legal name of the debtor.
0 coins
Connor O'Neill
We had a similar bailee ucc problem last year with inventory stored at a warehouse. The debtor name mismatch almost cost us our security interest when the debtor filed bankruptcy. What saved us was getting the name corrected with a UCC-3 amendment before any competing creditors filed.
0 coins
Miguel Castro
•How quickly were you able to get the UCC-3 amendment processed? Our lender is getting antsy about the timeline.
0 coins
Connor O'Neill
•Most states process UCC-3 amendments within 24-48 hours if filed electronically. But honestly, we started using Certana.ai's document verification tool after that scare - you can upload your loan docs and UCC forms and it catches name mismatches before you file.
0 coins
LunarEclipse
•Never heard of Certana.ai but that sounds like it could have saved us some headaches on our recent filings.
0 coins
Yara Khalil
Wait, I'm confused about bailee ucc filings. Do you file the UCC-1 in the state where the bailee is located or where the debtor is organized? We have equipment stored in Texas but our debtor is a Delaware LLC.
0 coins
Zainab Ibrahim
•For most collateral, you file where the debtor is organized (Delaware in your case). Location of the bailee doesn't change the filing jurisdiction unless you're dealing with fixtures or specific exceptions.
0 coins
Yara Khalil
•Thanks, that clears things up. These bailee situations add so many layers of complexity.
0 coins
Keisha Brown
The comma thing is usually not a big deal if everything else matches. I've seen courts treat "Johnson Construction LLC" and "Johnson Construction, LLC" as substantially similar for UCC purposes. But definitely check your state's specific rules.
0 coins
Miguel Castro
•That's somewhat reassuring. Though with $180K at stake, I'd rather be safe than sorry.
0 coins
Paolo Esposito
•Actually, some states are really strict about punctuation in entity names. Better to get it exactly right than assume substantial similarity will save you.
0 coins
Amina Toure
This is exactly why I hate bailee ucc arrangements. Too many moving parts and potential for mistakes. Regular possession or control agreements are so much cleaner.
0 coins
Miguel Castro
•Unfortunately the bailee arrangement was already in place when we took over this loan. Sometimes you inherit these situations.
0 coins
Oliver Weber
•True, but bailee arrangements can actually provide better protection in some cases, especially for equipment that needs to be stored in specialized facilities.
0 coins
FireflyDreams
Have you considered doing a UCC search on both name variations to see what comes up? That might give you a better sense of how the filing office treats these name differences in practice.
0 coins
Miguel Castro
•Good idea. I'll run searches on both versions to see if there are any existing filings with similar name issues.
0 coins
FireflyDreams
•Also check if the bailee has any UCC filings of their own that might create confusion or priority issues.
0 coins
Natasha Kuznetsova
•Yeah, sometimes bailees file their own financing statements for storage fees or other claims against the goods.
0 coins
Javier Morales
I use Certana.ai for exactly these situations - upload your loan documents and proposed UCC-1 and it flags any name inconsistencies automatically. Saved me from filing with the wrong debtor name variation on three different deals this year.
0 coins
Miguel Castro
•That sounds like exactly what I need. Is it easy to use for someone who's not super tech-savvy?
0 coins
Javier Morales
•Super simple - just drag and drop your PDFs and it does all the cross-checking automatically. Much faster than manually comparing every document.
0 coins
Emma Anderson
The bailee ucc filing should definitely use the debtor's exact legal name as shown in their organizational documents. The bailee's records are irrelevant for your financing statement. But make sure the collateral description in your UCC-1 is broad enough to cover goods held by bailees.
0 coins
Miguel Castro
•Our collateral description says "all construction equipment" - do you think that's broad enough to cover equipment held by third parties?
0 coins
Emma Anderson
•That should be fine, but you might want to add "whether now owned or hereafter acquired, and wherever located" to make it crystal clear.
0 coins
Malik Thompson
•Always good practice to be explicit about location independence in the collateral description for bailee situations.
0 coins
Isabella Ferreira
We had a nightmare bailee ucc situation where the warehouse went out of business and we couldn't locate our collateral. Make sure you have direct contact info for the bailee and regular confirmation of what equipment they're holding.
0 coins
Miguel Castro
•Yikes, that sounds terrible. We do have a direct relationship with the storage facility, but that's a good reminder to stay on top of the inventory.
0 coins
Isabella Ferreira
•Also make sure your bailee agreement gives you the right to inspect and take possession of the collateral if needed.
0 coins
CosmicVoyager
Just get the LLC formation documents from the Secretary of State and use whatever name appears there for your UCC-1. The bailee's warehouse receipts don't determine the legal name of your debtor. Simple as that.
0 coins
Miguel Castro
•You're right, I'm probably overthinking this. I'll get the official formation docs and file based on that.
0 coins
Ravi Kapoor
•Sometimes the simple approach is the best approach. Don't let bailee complications distract from basic UCC filing requirements.
0 coins
Freya Nielsen
•Agreed. The bailee ucc aspect doesn't change the fundamental rule about using the debtor's correct legal name.
0 coins
CosmosCaptain
I've handled several bailee UCC situations and the name mismatch issue is definitely something to take seriously. The good news is that courts generally focus on whether a reasonable searcher would find your filing when searching under the debtor's correct legal name. Since you're dealing with just a comma difference between "Johnson Construction LLC" and "Johnson Construction, LLC", this is likely a minor variation that wouldn't invalidate your filing. However, given the $180K value at stake, I'd recommend: 1) Pull the official LLC formation documents to confirm the exact legal name, 2) File using that exact name, and 3) Consider filing a second UCC-1 with the alternative name variation as extra protection. The filing fee for a second UCC-1 is minimal compared to the risk of losing perfection on such valuable collateral. Also, make sure your security agreement specifically addresses goods held by bailees to avoid any gaps in coverage.
0 coins