UCC filing priority confusion - which lender gets paid first after equipment seizure?

This is exactly what happened to us last year! Our original lender filed with an outdated entity name and lost priority to a later-filed UCC because of it. The courts said an incorrect debtor name makes the filing 'seriously misleading' and essentially ineffective.

Wait, so even though Bank A filed first, they could lose priority just because of a name issue? That seems harsh for what might be a simple clerical error.

How do you actually test this? Do you just run a UCC search under both names and see what comes up?

Exactly - run a search under your current legal name. If Bank A's filing doesn't appear in the results, that's strong evidence it's seriously misleading. Most states have pretty strict rules about debtor name accuracy for this exact reason.

The search logic makes sense, but couldn't Bank A argue they filed under the name that was correct at the time? Seems like there should be some protection for that.

That sounds useful - does it actually analyze priority rules or just flag inconsistencies?

It flags inconsistencies and potential issues with perfection, including debtor name problems that could affect priority. Won't replace legal advice but gives you a clear picture of document problems that might matter in a priority dispute.

I get the frustration but the name accuracy requirement exists for good reason - other potential creditors need to be able to find existing liens when they're considering financing. If the debtor name is wrong, the whole notice system breaks down.

Fair point about the notice function, but there's got to be a better balance. Maybe a grace period for amendments after entity name changes or something.

Some states do have more lenient rules for minor errors, but LLC name changes usually aren't considered minor since it's a different legal entity technically.

Good point, I should review both loan agreements. If Bank A was supposed to monitor for name changes and file amendments, that might affect how this gets resolved.

Usually the borrower has to notify lenders of entity changes, not the other way around. But worth checking what your specific agreements say about UCC maintenance responsibilities.

That's brutal. Did the first lender try to argue anything about the name being substantially similar or recognizable?

They tried but it didn't work. The test is whether someone searching under the correct current name would find the filing, and they wouldn't have. No middle ground on debtor name accuracy unfortunately.

This is why I always double-check entity names with the Secretary of State database before finalizing any UCC filings. One typo can cost millions in priority disputes.

So in theory, a third lender could file tomorrow with the correct debtor name and potentially jump ahead of both existing liens if they're both defective?

Exactly right. Priority goes to the first properly perfected security interest, not just the first filed. That's why debtor name accuracy is so critical in these multi-lender situations.

Already contacted our attorney but wanted to understand the basic priority rules first. Sounds like Bank A's name error is probably going to be a big problem for their claim.

Smart approach. Understanding the UCC priority basics helps you follow your lawyer's strategy better and ask better questions about potential outcomes.

Just make sure your lawyer has experience with UCC priority disputes specifically. General business litigation isn't the same as secured transaction law.

Does that tool actually understand priority rules or just catch document errors?

It identifies inconsistencies that typically impact perfection and priority, including debtor name mismatches like you're dealing with. Won't give legal conclusions but shows you exactly what issues exist in your filings.

What if the old LLC name was just slightly different - like missing 'LLC' at the end or having an extra word? Would that still invalidate the filing?

Even small differences can be fatal. The general rule is the debtor name must match exactly what's on file with the state. Missing 'LLC' designation has definitely caused priority losses in court cases I've seen.

This seems overly technical. If it's obvious what entity they meant to reference, shouldn't that count for something in determining priority?

The UCC system relies on precise searching by exact name matches. If you allow 'obvious' interpretations, the whole notice system becomes unreliable for other creditors trying to discover existing liens.

@6e07102cac3f This is a critical point for your situation. Since you mentioned Bank A used your "old LLC name" while Bank B used the current legal name, you should immediately run a UCC search under your current entity name to see if Bank A's filing appears. If it doesn't show up in the search results, that's strong evidence their security interest wasn't properly perfected, which would likely give Bank B priority despite filing second. The exact matching requirement exists because secured creditors need to be able to find all existing liens when making lending decisions.