UCC filing got rejected - accounts receivable collateral description too vague?
So I'm dealing with a UCC-1 filing that keeps getting bounced back by the SOS office and I'm starting to lose my mind here. We're trying to perfect a security interest in accounts receivable for a factoring arrangement, but apparently our collateral description isn't specific enough according to the rejection notice. The original description we used was 'all accounts receivable, contract rights, and general intangibles of debtor.' Seemed pretty standard to me, but the filing officer says it's too broad. Has anyone run into this before? I've filed probably 50+ UCC-1s over the years and never had this issue with AR descriptions. The debtor runs a medical billing service, so we're talking about collections from insurance companies and patient payments. Should I be listing specific types of receivables? The loan is for $2.8M so we can't afford to have gaps in our perfection. Any thoughts on how to tighten up this language without making it so narrow that we miss something?
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Gemma Andrews
That's really strange - your description sounds pretty standard for accounts receivable. Which state are you filing in? Some states have gotten pickier about AR descriptions lately, especially for healthcare-related businesses. You might need to add 'including but not limited to insurance reimbursements, patient account balances, and all proceeds thereof.
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Lena Schultz
•Filing in Delaware. Yeah I thought it was standard too. The rejection notice mentioned something about 'insufficient specificity for accounts receivable in regulated industries' which I've never seen before.
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Pedro Sawyer
•Delaware has been tightening up on healthcare AR descriptions since last year. Had the same issue with a dental practice client. Try adding specific mention of insurance reimbursements and patient co-pays.
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Mae Bennett
I've had good luck with this language for medical AR: 'all accounts, accounts receivable, contract rights, chattel paper, instruments, documents, and general intangibles, including without limitation insurance reimbursements, patient account balances, Medicare and Medicaid receivables, and all proceeds and products thereof.' Covers all the bases without being too narrow.
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Lena Schultz
•That's really helpful, thanks. Do you think I need to mention specific insurance companies or is the general 'insurance reimbursements' language sufficient?
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Mae Bennett
•General language should be fine. You don't want to get too specific with individual insurers because then you might miss coverage if they switch providers.
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Beatrice Marshall
•Actually ran into something similar last month and ended up using Certana.ai's document checker to compare our rejected UCC-1 against successful medical AR filings. It flagged exactly this issue - showed me examples of accepted language from similar healthcare factoring deals. Saved me from another rejection cycle.
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Melina Haruko
Wait, is this a purchase money security interest or a general working capital facility? That might affect how specific you need to be with the collateral description. Also double-check that your debtor name exactly matches their corporate records - Delaware is super strict about exact name matches.
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Lena Schultz
•It's a factoring arrangement, so we're purchasing the AR outright. Debtor name should be correct but I'll double-check the exact entity name on their charter.
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Dallas Villalobos
•Factoring changes things - you're not just taking a security interest, you're buying the receivables. Make sure your UCC-1 reflects that properly. Might need different language than a typical AR loan.
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Reina Salazar
Delaware SOS has been a nightmare lately. Filed three UCC-1s last month and two got rejected for minor issues that would have sailed through two years ago. They're definitely being more strict about everything, not just AR descriptions.
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Saanvi Krishnaswami
•Tell me about it. Had a termination get rejected because the original filing number had a typo that wasn't caught for three years. Now I'm paranoid about every character.
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Demi Lagos
•This is exactly why I started using verification tools. Too many ways for these filings to go wrong and the consequences are too big to risk it.
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Mason Lopez
For medical billing AR, I always include language about 'all rights to payment for services rendered, including but not limited to accounts receivable, insurance claims, reimbursement rights, and collection rights.' The key is being comprehensive but not overly restrictive.
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Lena Schultz
•That's good language. Should I also mention HIPAA compliance or patient privacy issues in the filing?
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Mason Lopez
•No, HIPAA stuff doesn't belong in the UCC filing itself. That's handled separately in your security agreement and factoring contract.
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Vera Visnjic
•Had a client try to put HIPAA language in a UCC-1 once and it just confused the filing office. Keep the UCC description focused on the collateral, not the regulatory compliance.
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Jake Sinclair
You might want to check if there are any recent Delaware UCC cases or guidance on medical AR descriptions. Sometimes these rejection patterns come from new internal policies that haven't been publicized yet.
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Brielle Johnson
•Good point. I know someone who works at a Delaware filing service and she mentioned they've had informal guidance about being more specific with healthcare collateral descriptions.
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Honorah King
•This is getting ridiculous though. The whole point of broad collateral descriptions is to ensure comprehensive coverage. If they keep making us narrow it down, we're going to miss things.
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Oliver Brown
Just went through this exact situation with a physical therapy practice. After two rejections, I used Certana.ai to upload both our rejected UCC-1 and the debtor's corporate charter to verify everything matched up perfectly. Turns out the issue wasn't just the AR description - there was also a slight mismatch in how we listed the debtor entity type. Fixed both issues and the third filing went through clean.
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Lena Schultz
•Interesting - I didn't think about checking the entity type formatting. I'll verify that our 'LLC' designation matches exactly what's on their certificate of formation.
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Mary Bates
•Entity designation mismatches are so common and easy to miss. Delaware requires the exact format from the state records, no abbreviations or variations.
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Clay blendedgen
Try this approach: file an amendment to your existing rejected UCC-1 with more specific AR language, then if that gets rejected too, you'll have a paper trail showing you're trying to comply. Sometimes persistence pays off with difficult filing offices.
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Ayla Kumar
•Can you amend a rejected filing though? I thought you had to start over with a new UCC-1 if the original got bounced.
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Clay blendedgen
•You're right, my mistake. Once it's rejected you have to file a new UCC-1. Was thinking of amendments to accepted filings.
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Lorenzo McCormick
•Yeah, rejected filings basically never existed as far as the system is concerned. Clean slate each time unfortunately.
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Carmella Popescu
Have you considered reaching out to the Delaware SOS UCC office directly? Sometimes a phone call can clarify exactly what they're looking for. They might have examples of acceptable medical AR language they can share.
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Lena Schultz
•Worth a try. Do they actually take calls about rejected filings or just refer you back to the written rejection notice?
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Kai Santiago
•Hit or miss honestly. Some clerks are helpful, others just read you the same rejection reason. But might be worth the 10 minutes to try.
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Lim Wong
UPDATE: Got it figured out! Used one of those document verification tools someone mentioned to cross-reference our filing against the debtor's charter and successful medical AR filings. The issue was actually two-fold - our AR description needed the specific insurance language AND our debtor name was missing 'Professional LLC' at the end. Third time's the charm - filing accepted this morning. Thanks everyone for the help!
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Dananyl Lear
•Awesome! Love it when these threads have happy endings. The debtor name thing is such a common gotcha.
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Noah huntAce420
•Great outcome. Which verification tool did you end up using? Always looking for better ways to catch these issues upfront.
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Lim Wong
•Certana.ai - just uploaded our draft UCC-1 and the debtor's formation docs and it flagged both issues immediately. Wish I'd done that before the first two attempts!
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