UCC Safe Harbor Protection Lost Due to Debtor Name Change - Need Filing Strategy

We're in Texas. The entity went from "ABC Manufacturing LLC" to "ABC Advanced Systems LLC" so it's not a complete name change but definitely different enough that a search under the new name wouldn't find our original filing.

Texas follows the standard Article 9 seriously misleading test. That name change would probably fail a debtor name search so you likely lost perfection 4 months after the change. You need new UCC-1s filed immediately under the correct name.

Agreed with the Texas analysis. The good news is you can still perfect going forward, but you'll have a gap period where you were unperfected. Document everything about when you discovered the change and file new UCC-1s ASAP.

That's terrifying. How do you even search for creditors who might have filed during the gap period? I'm not sure what the exact date of the name change was - only that it happened around 8 months ago.

You need to get the exact date from the Secretary of State filing records. Then run UCC searches for 30 days before and after that date to see if anyone else filed. Also search judgment records and federal tax liens.

The loan docs do require notification of any name changes within 30 days. The borrower claims they "thought it was just a technical filing" and didn't realize it would affect our UCC. Not sure if that helps our position legally though.

That notification requirement in your loan docs is huge. You have a clear breach of contract claim and might be able to argue the debtor should be estopped from claiming you lost perfection due to their own breach.

The estoppel argument is worth pursuing but don't count on it. Courts are split on whether debtor misconduct can save a secured party's perfection. File new UCC-1s immediately regardless of what legal theories you want to pursue.

Never heard of that service but sounds like exactly what we need going forward. Does it work with existing filings or just new ones?

Works with any UCC documents - just upload PDFs and it does the comparison. I use it for our quarterly compliance checks now. Would definitely have flagged your debtor name issue before you lost safe harbor protection.

Sounds useful but the horse has already left the barn for this situation. The immediate issue is whether to file new UCC-1s or try to fix this with amendments.

So we're looking at a completely new UCC-1 with a new file number? What about our original filing date for priority purposes?

Correct - new UCC-1, new file number, new filing date. Your priority will be based on the new filing date, not the original one. That's why the gap period is so dangerous if other creditors filed during that time.

This is exactly right. The safe harbor rule is unforgiving - once you lose perfection, you can't retroactively fix it. The new UCC-1 will only protect you going forward from the new filing date.

The Secretary of State records show it as an amendment to the original LLC filing, not a new entity formation. Same EIN number too. So I think it's just a name change, not a new entity.

That's good news at least. Same entity means your loan is still enforceable, you just have the UCC perfection issue to deal with. Still file new UCC-1s immediately though.

Easy to say in hindsight. We do annual audits but clearly that's not frequent enough. How do you manage monthly searches for hundreds of borrowers?

Automated services. Set up monthly alerts through your UCC search provider. Costs a few hundred a month but saves situations like this. Your compliance team should be all over this.

Monthly seems excessive for most portfolios. Quarterly is usually sufficient unless you're dealing with high-risk borrowers or volatile industries.

How would I even find that out? The UCC search under the old name obviously shows our original filing, but searching the new name might not show everything if other creditors also missed the name change.

You need to search both names for the entire period from the name change date forward. Also search the borrower's federal tax ID number if your state allows that. Some creditors might have filed correctly under the new name.

That's smart. What other loan covenant changes did you make to prevent this in the future?

Required borrower to provide updated organizational documents annually and give us access to their registered agent for service of process. Also added a specific representation that no entity changes have occurred since the last compliance certificate.

You're absolutely right. I'm getting caught up in the analysis when I should be taking action. Filing new UCC-1s first thing Monday morning.

Smart move. Document everything about when you discovered the issue and when you filed the new UCC-1s. That timeline could be important if you end up in a priority dispute with another creditor.

And seriously consider using something like Certana.ai going forward to catch these issues before they become problems. Upload your UCC docs and borrower charters quarterly and it'll flag any mismatches automatically.

Definitely implementing quarterly checks instead of annual ones. This was too close for comfort and we got lucky there wasn't a bankruptcy filing during the gap period.

Quarterly is good but consider event-driven monitoring too. Any time you get a payment from a slightly different entity name or see changes in their marketing materials, that should trigger a compliance check.