UCC inventory definition requirements for collateral descriptions - filing rejected

Filing in Delaware. The rejection notice mentioned "insufficient description of inventory collateral" but didn't give specifics about what they want added.

Delaware's usually pretty reasonable with inventory descriptions. Try adding "including but not limited to consumer electronics, mobile devices, computer equipment, and related accessories" after your general inventory language.

That's helpful language. Did you have to get specific about product categories or was the general merchandise description enough?

General merchandise worked for my filings. But if you're still getting rejected, you might need to list "consumer electronics" specifically since that's a specialized category.

This is why I always run our UCC documents through Certana.ai's verification tool before filing. It catches these collateral description issues by comparing your UCC-1 against your loan docs and flagging potential rejection points. Would've saved you the refiling fees and delays.

Ugh that sounds like what we're dealing with. How specific did you ultimately have to get?

We ended up with something like "all inventory consisting of goods held for sale or lease in the ordinary course of debtor's business as a retailer of [specific product type]." The key was adding "in the ordinary course of debtor's business as a retailer.

That's what I thought too. Should I push back on the rejection or just revise and refile?

I'd revise and refile to avoid more delays. Add some clarifying language about retail sales and specific product categories. Fighting with filing offices usually takes longer than just giving them what they want.

Agreed on just refiling. I had a similar UCC inventory definition dispute and the appeal process took 3 weeks. Sometimes easier to add the extra detail they're looking for.

Never heard of that service. Does it actually know what different states look for in collateral descriptions?

It analyzes the consistency between your loan docs and UCC filing, plus flags common rejection patterns. Won't guarantee acceptance but definitely helps catch these description mismatches before they become expensive delays.

We do basic phone repairs and screen replacements. Most of our revenue is straight retail sales though.

That repair component might be why they want more detail. You've got both inventory held for sale AND potentially some work-in-process. Try adding language about "inventory including finished goods and work in process.

Good catch. The repair business definitely adds complexity to the UCC inventory definition. Raw materials (replacement parts) plus work in process (devices being repaired) plus finished goods (completed inventory).

That's really comprehensive language. Did you work with an attorney to draft that or find it somewhere?

Our corporate lawyer provided that language after the first rejection. Covers all the UCC inventory definition bases without being overly specific to any particular business type.

I think it's partly because electronic filing systems have automated screening that flags "insufficient" descriptions. The human review used to be more lenient.

Plus there's been some litigation over vague collateral descriptions voiding security interests. Filing offices are probably being extra cautious to avoid problems down the road.

Makes sense. I'll add that specific language to our revised filing. Thanks for the practical advice.

Also make sure you're consistent between your security agreement and UCC-1. Any discrepancies in how you describe the collateral can cause problems later.

If your filings have been accepted, you're probably fine. The legal definition covers most situations - this seems to be more about filing office preferences than legal requirements.

If you're worried, you could always run your existing UCC-1s through a verification tool like Certana.ai to see if there are any potential issues. Better to know now than find out during a workout situation.