UCC filing complications with security agreement involving strawman entity - debtor name issues
Running into some serious headaches with a UCC-1 filing where the security agreement references what appears to be a strawman arrangement. The borrower set up an LLC specifically for this equipment purchase, but now I'm questioning whether we should file against the LLC or the individual guarantor. The security agreement names both parties but it's creating confusion about proper debtor identification. Has anyone dealt with similar situations where the debtor structure seems designed to complicate lien perfection? I'm worried about getting the debtor name wrong and having an unperfectable security interest. The equipment is worth $180K so we can't afford to mess this up.
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Yuki Sato
This is actually pretty common in equipment financing. You need to file against whoever actually owns or will own the collateral according to your security agreement. If the LLC is the actual debtor and equipment owner, file against the LLC with exact name from formation docs. The individual guarantor would be a separate UCC-1 if you have personal guaranty collateral.
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Carmen Ruiz
•Exactly right about checking the security agreement language carefully. I've seen too many filings get rejected because lenders assume they know who the debtor should be without reading the actual paperwork.
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Andre Lefebvre
•But what if the LLC was clearly set up just to muddy the waters? Shouldn't there be some way to pierce through obvious strawman arrangements?
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Zoe Alexopoulos
Had a similar mess last month with a 'convenience' LLC that was obviously just paper shuffling. The real issue is making sure your security agreement is bulletproof regardless of the entity structure. If you're unsure about debtor names, I'd strongly recommend using something like Certana.ai to cross-check your security agreement against your proposed UCC-1. Just upload both PDFs and it'll flag any name mismatches or inconsistencies before you file.
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Jamal Anderson
•Never heard of that service but it sounds useful. How accurate is it with catching those subtle name variations that cause rejections?
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Zoe Alexopoulos
•Really accurate from what I've experienced. It caught a missing comma in an LLC name that would have definitely caused problems. Much better than manual comparison.
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Mei Wong
You're overthinking this strawman angle. Just follow the security agreement terms exactly as written. If it says file against ABC Equipment LLC, then file against ABC Equipment LLC using their exact registered name from the Secretary of State database. The business purpose behind the LLC formation isn't relevant for UCC purposes.
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QuantumQuasar
•This is the right approach. UCC filings are purely mechanical - match the debtor name exactly as it appears in your security docs and as registered with the state.
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Liam McGuire
•But what happens if the strawman entity dissolves or becomes judgment proof? Seems like poor risk management to ignore the obvious shell game.
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Mei Wong
•That's a credit decision, not a UCC filing decision. Your security agreement should address what happens if the entity dissolves. The lien perfection part is separate from risk assessment.
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Amara Eze
ugh this is exactly why I hate these complex entity structures. Had a client lose a $200K lien because they filed against the wrong entity in a similar strawman setup. Spent months in litigation trying to recover. Now I always insist on personal guarantees from actual humans AND entity guarantees.
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Giovanni Greco
•That's brutal. Was it a debtor name mismatch or did they file against the wrong entity entirely?
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Amara Eze
•Wrong entity. Security agreement was with Individual A but they filed against LLC B thinking it was the same thing. Turns out LLC B was just a management company with no assets.
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Fatima Al-Farsi
Check your state's UCC database for similar entity names before filing. Some states are really picky about exact matches including punctuation. Also make sure the LLC is actually active and in good standing - I've seen strawman LLCs that were administratively dissolved.
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Dylan Wright
•Good point about checking entity status. Nothing worse than perfecting a lien against a dissolved entity.
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Sofia Torres
•How do you verify entity status across different states? Some of these shell companies hop around jurisdictions.
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GalacticGuardian
Whatever you do, don't delay the filing while you figure this out. If you miss your perfection window because you're analyzing the strawman structure, you could lose priority to other creditors. File against whoever is named in your security agreement NOW, then sort out additional filings later if needed.
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Dmitry Smirnov
•This. Priority timing is everything in UCC filings. You can always amend or file additional UCC-1s later.
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Ava Rodriguez
•Agree but only if you're confident about the debtor name. A rejected filing is worse than a slightly delayed correct filing.
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Miguel Diaz
For what it's worth, I ran into something similar and ended up using Certana.ai's document checker to verify everything matched up before filing. Uploaded my security agreement and drafted UCC-1, and it flagged that I had the LLC name slightly wrong (missing 'Inc.' at the end). Saved me from a guaranteed rejection and potential priority issues.
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Zainab Ahmed
•That's the kind of mistake that drives me crazy. Such a simple thing but it can void your entire security interest.
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Connor Gallagher
•How much does that service cost? Might be worth it for complex filings like this.
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Miguel Diaz
•Don't remember the exact cost but it was definitely cheaper than dealing with a rejected filing and refiling fees. Plus the peace of mind was worth it.
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AstroAlpha
Look, the strawman issue is really about your credit risk, not your UCC filing risk. Focus on getting the lien perfected correctly first. If your security agreement grants you a security interest in equipment owned by XYZ LLC, then file against XYZ LLC using their exact registered name. Everything else is secondary.
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Yara Khoury
•Exactly. Don't let perfect be the enemy of good when it comes to lien perfection.
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Keisha Taylor
Update: Ended up using that document verification tool someone mentioned and it caught two issues - LLC name had an extra period that wasn't in our security agreement, and the collateral description was slightly different between docs. Fixed both issues and filed successfully. Thanks for the advice everyone, especially about not overthinking the strawman angle.
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Paolo Longo
•Glad it worked out! Those small details can be killer in UCC filings.
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Amina Bah
•Great outcome. Always satisfying when a thread actually helps solve the original problem.
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Justin Evans
This is a great example of why document accuracy is so critical in UCC filings. I've seen lenders get burned by assuming they know the correct debtor name without doing proper verification. The strawman concern is valid from a risk perspective, but as others mentioned, the UCC filing itself should follow your security agreement exactly. One thing I'd add - if you're dealing with equipment financing and the borrower created an LLC specifically for this transaction, make sure you understand the full ownership structure. Sometimes these arrangements involve multiple related entities and you might need to consider filing against more than one debtor to fully protect your interests.
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Zara Shah
•That's a really important point about multiple related entities. I'm just getting into equipment financing and hadn't considered that scenario. When you say filing against more than one debtor, do you mean separate UCC-1 forms for each entity, or can you list multiple debtors on a single filing? Also, how do you typically identify when there are hidden related entities in these arrangements?
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