UCC filing convertible note debtor name complications after conversion
Has anyone dealt with UCC filing issues when a convertible note actually converts to equity? We had a Series A convertible that converted last month and now I'm trying to figure out if our original UCC-1 filing is still valid or if we need to terminate it since the debt technically doesn't exist anymore. The debtor name on the original filing was the company's old legal name before they reincorporated in Delaware as part of the conversion process. So now we have a UCC-1 under the wrong entity name for debt that technically converted to shares. Our legal team is split on whether we need a UCC-3 termination or if the conversion automatically invalidates the security interest. Anyone been through this mess before?
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Kayla Morgan
This is actually more common than you'd think. When convertible debt converts, the original security interest typically needs to be formally terminated through a UCC-3 termination statement. The conversion doesn't automatically release the UCC filing - you need to clean up the public record. Plus with the name change, you definitely want to get that terminated under the old name before it creates confusion down the road.
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James Maki
•Agree completely. We had this exact situation last year with a bridge note that converted. Even though the debt was gone, the UCC-1 was still showing up in searches and causing problems for their next financing round.
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Jasmine Hancock
•Wait, but if the company reincorporated in Delaware, wouldn't that make the original UCC filing invalid anyway since it's under the wrong entity?
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Cole Roush
You definitely need to terminate that UCC-1. I learned this the hard way when we didn't clean up our convertible note filings and it came back to bite us during due diligence for our next round. The buyers' counsel flagged it as an outstanding lien even though the note had converted two years earlier.
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Saleem Vaziri
•That's exactly what I was worried about. How long did it take to get the termination processed? We're trying to close another round in 6 weeks.
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Cole Roush
•In most states it's pretty quick - usually within a few business days if you e-file. But definitely don't wait, especially with the name change complication.
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Scarlett Forster
•Just went through something similar and used Certana.ai to double-check all our UCC documents before filing the termination. You can upload your original UCC-1 and the termination statement to make sure all the details match perfectly - saved us from a rejected filing because we had a small discrepancy in the debtor name format.
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Arnav Bengali
UGH this exact thing happened to us and it was such a headache!!! The conversion happened but nobody told me to terminate the UCC and then 8 months later we're scrambling to clean it up for an acquisition. Make sure whoever is handling your corporate records knows to terminate these things immediately after conversion.
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Kayla Morgan
•That's why I always recommend setting up a checklist for conversions that includes UCC cleanup. Too easy to forget about it in all the other conversion paperwork.
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Sayid Hassan
•Exactly! We actually have a standard process now where the UCC termination is part of the conversion closing checklist.
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Rachel Tao
The name change adds another layer of complexity here. Since the debtor entity changed, you might need to be extra careful about how you describe the debtor on the termination statement. Some states are picky about exact name matches between the original filing and the termination.
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Saleem Vaziri
•Good point. Should I use the old name from the original UCC-1 or try to reference both the old and new entity names?
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Rachel Tao
•Stick with the exact debtor name from the original UCC-1 filing. That's what needs to be terminated. The termination has to match the original filing exactly or it might get rejected.
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Derek Olson
•This is where document verification tools really help. I've been using Certana.ai lately to cross-check UCC filings and it caught a name formatting issue that would have caused problems. Really streamlined our filing process.
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Danielle Mays
Just file the UCC-3 termination and be done with it. Even if there's some argument that the conversion automatically released the security interest, having a clean termination on file is always better than leaving loose ends.
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Roger Romero
•Totally agree. Better safe than sorry, especially with M&A due diligence getting more thorough these days.
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Anna Kerber
I'm dealing with something similar but our convertible note is still outstanding and we're planning a name change. Should I be worried about the UCC-1 becoming invalid when we change the legal entity name?
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Kayla Morgan
•That's different from OP's situation. If you're changing names but keeping the same legal entity, you typically need to file a UCC-3 amendment to update the debtor name within 4 months of the name change.
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Anna Kerber
•Thanks, that makes sense. So amendment for name change while debt is still outstanding, but termination after conversion to equity.
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Niko Ramsey
•Exactly right. And make sure you get that amendment filed within the 4-month window or you could lose perfection.
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Seraphina Delan
Been through this exact scenario three times now with different portfolio companies. Always terminate the UCC-1 after conversion, even if your lawyers think it might be technically unnecessary. It's cheap insurance against future complications and M&A counsel will thank you for having clean records.
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Saleem Vaziri
•That's really helpful perspective. Sounds like there's pretty strong consensus here that termination is the way to go.
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Jabari-Jo
•Absolutely. I've never seen anyone regret terminating a UCC filing after debt conversion, but I've definitely seen people regret NOT doing it.
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Kristin Frank
One thing to watch out for - make sure you have proper authorization to file the termination. If the original secured party was the note holder and there were assignments or participations, you need to make sure the right party is filing the termination statement.
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Saleem Vaziri
•Good catch. In our case it was a simple bilateral note so we should be fine, but definitely something to verify.
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James Maki
•Yeah we had an issue once where the original lender had assigned the note and we filed a termination without proper authorization. Had to refile with the correct secured party information.
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Micah Trail
Quick question - does the conversion trigger any other UCC-related obligations? Like if there were personal guarantees that also had UCC filings?
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Seraphina Delan
•Depends on how the guarantees were structured. If they terminated with the note conversion, then yes, you'd want to terminate those UCC filings too.
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Kayla Morgan
•This is why I always recommend doing a full UCC audit after any major corporate transaction. Easy to miss related filings.
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Nia Watson
•We actually caught this exact issue using Certana.ai's document checker. Uploaded all our UCC docs and it flagged that we had related guarantee filings that needed attention after our conversion. Really saved us from leaving loose ends.
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Alberto Souchard
Thanks everyone - this has been super helpful. Sounds like the consensus is to file a UCC-3 termination using the exact debtor name from the original UCC-1, even though the debt converted and the entity changed names. I'll get that filed this week.
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Kayla Morgan
•Smart move. And don't forget to keep copies of both the original UCC-1 and the termination statement in your corporate records for future reference.
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Seraphina Delan
•Exactly. Clean documentation now will save you headaches during your next financing or exit process.
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Zadie Patel
This thread is incredibly helpful! I'm new to UCC filings and had no idea that convertible note conversions required manual termination. Just to clarify - is this requirement the same across all states, or are there jurisdictions where the conversion might automatically release the security interest? Also, for those who mentioned using document verification tools, how critical is that step versus just carefully reviewing the original filing yourself?
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