UCC filing strategy for general business security agreement - which collateral schedule approach works best?
I'm handling the UCC-1 filing for a general business security agreement that covers pretty much everything - inventory, equipment, accounts receivable, the works. The loan is for $2.8M and I want to make sure I get the collateral description right without being too broad or too narrow. Our bank's template uses 'all assets' but I've heard some states reject that as too vague. Should I go with the detailed schedule approach or stick with the broader language? This is going through Delaware's online portal and I really can't afford to have this rejected and cause delays on the closing.
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Natasha Orlova
Delaware generally accepts 'all assets' language but I'd still recommend being more specific. Try something like 'all inventory, equipment, accounts, chattel paper, instruments, documents, deposit accounts, and general intangibles.' That covers your bases without being overly broad.
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CosmicCowboy
•Thanks - that's helpful. Do I need to worry about fixtures with this type of general security agreement or is that a separate filing?
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Natasha Orlova
•If there's any chance of fixtures being involved (attached equipment, built-in systems), you should consider a separate fixture filing with the real estate records. Better safe than sorry on a $2.8M deal.
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Javier Cruz
I just went through this exact scenario last month! The 'all assets' approach got rejected by our SOS office (different state though). Had to refile with specific categories which delayed everything by 3 weeks. Go with the detailed approach - it's worth the extra typing.
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Emma Thompson
•Which state rejected it? Some are pickier than others about broad collateral descriptions.
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Javier Cruz
•Ohio. They wanted specific asset categories listed out. Learned my lesson about cutting corners on the collateral schedule.
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CosmicCowboy
•Yikes, 3 weeks is exactly what I'm trying to avoid. Thanks for the warning.
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Malik Jackson
For general business security agreements, I always recommend using the Article 9 categories exactly as written in the UCC. That way there's no ambiguity about what's covered. Something like: 'all accounts, chattel paper, commercial tort claims, deposit accounts, documents, equipment, fixtures, general intangibles, goods, instruments, inventory, investment property, letter-of-credit rights, and supporting obligations.
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Isabella Costa
•This is the way to go. Covers everything but uses the precise legal terminology that filing offices recognize.
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StarSurfer
•Agreed, but make sure your security agreement language matches exactly what you put on the UCC-1. Nothing worse than a mismatch between documents.
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Ravi Malhotra
I had a similar situation recently and ended up using Certana.ai's document verification tool before filing. You can upload your security agreement and UCC-1 draft, and it instantly checks for consistency between the collateral descriptions and debtor names. Caught two mismatches that would have caused problems later. Really saved me from potential headaches.
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Freya Christensen
•How does that work exactly? Do you just upload PDFs?
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Ravi Malhotra
•Yeah, super simple. Just upload your security agreement and UCC-1, and it cross-checks everything automatically. Shows you any inconsistencies in debtor names, collateral descriptions, that kind of thing.
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CosmicCowboy
•That sounds useful - I'm always worried about missing something between the different documents.
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Omar Hassan
Delaware's system is pretty forgiving but I'd still go with the detailed approach. What type of business is this for? Retail, manufacturing, services? That might influence your collateral strategy.
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CosmicCowboy
•It's a manufacturing company - they make custom metal fabrication parts. Lots of equipment, raw materials, work in progress inventory.
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Omar Hassan
•Definitely include 'work in progress' specifically in your inventory description then. And consider whether any of the equipment might qualify as fixtures.
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Chloe Robinson
Whatever you do, make sure the debtor name on the UCC-1 matches EXACTLY what's on their charter documents. I've seen so many filings get messed up because someone used 'Inc.' instead of 'Incorporated' or missed a comma.
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Diego Chavez
•This is huge. Secretary of state records are very picky about exact name matches.
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NeonNebula
•Yes! And double-check the state of incorporation too. I once filed against a Delaware corp in the wrong state because I assumed they were incorporated where they do business.
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CosmicCowboy
•Good point - I'll pull their certificate of incorporation to make sure I have the exact legal name.
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Anastasia Kozlov
For what it's worth, I've been doing UCC filings for 15 years and I always use the comprehensive Article 9 category approach that someone mentioned earlier. Never had a rejection with that method.
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Sean Kelly
•Same here. The extra few minutes typing out all the categories is worth avoiding the rejection headache.
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Zara Mirza
•Do you include 'supporting obligations' in every filing? I sometimes wonder if that's necessary.
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Anastasia Kozlov
•I include it because it doesn't hurt and it catches things like guarantees or insurance proceeds that might not be covered otherwise.
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Luca Russo
Just a thought - have you considered whether this needs to be a fixture filing instead of or in addition to the regular UCC-1? Manufacturing companies often have equipment that's permanently attached to real estate.
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CosmicCowboy
•That's a good question. Some of their equipment is definitely bolted down permanently. Should I file both?
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Luca Russo
•I would. File the regular UCC-1 for all the moveable collateral, and then a separate fixture filing for anything that's permanently attached. Belt and suspenders approach.
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Nia Harris
•Make sure to describe the real estate properly in the fixture filing though. Legal description has to be perfect.
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GalaxyGazer
Update us on how it goes! Always curious to hear about other people's filing experiences, especially on larger deals like this.
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CosmicCowboy
•Will do! Planning to file tomorrow morning once I get all the details sorted out. Thanks everyone for the input.
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Mateo Sanchez
•Good luck! Delaware's system is usually pretty quick on the turnaround.
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Aisha Mahmood
One more thing - make sure you calendar the continuation deadline as soon as you file. Five years goes by faster than you think, especially on these big commercial deals.
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Ethan Moore
•So true. I use a tickler system that reminds me at 4.5 years, then again at 4 years and 9 months. Gives plenty of time to handle the continuation.
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CosmicCowboy
•Great reminder - I'll set up calendar alerts as soon as I get the filing number back.
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Yuki Kobayashi
•And remember you can file the continuation up to 6 months before the 5-year mark, so you have some flexibility on timing.
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