UCC letters of credit filing confusion after bank merger - need help
Hey everyone, I'm dealing with a mess after our main bank got acquired last month. We have several equipment loans secured by UCC-1 filings, and now I'm getting conflicting info about whether our letters of credit need separate UCC filings or amendments. The new bank's loan officer says our existing UCC-1s don't cover the LC arrangements properly, but our old relationship manager assured us everything was filed correctly 18 months ago. I pulled the filings from the SOS database and honestly can't tell if the collateral descriptions are broad enough to include the letter of credit rights. Has anyone dealt with this kind of situation? The loans are substantial ($2.3M total) and I'm worried we might have gaps in our lien perfection. Really need some guidance here before we potentially mess something up worse.
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Daniel White
This is actually pretty common after bank mergers. The new institution often has different internal policies about what they consider properly secured. Letters of credit can be tricky - they might need specific mention in the collateral description depending on your state. What does your original UCC-1 collateral description say exactly?
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Abigail Patel
•It says 'all accounts, chattel paper, instruments, documents, general intangibles, and proceeds thereof' - pretty standard broad language I thought. But the new bank seems to think LC rights need more specific mention.
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Daniel White
•That language should cover most LC arrangements under the 'general intangibles' category, but some banks prefer explicit mention. Might be worth getting a UCC attorney to review before filing any amendments.
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Nolan Carter
Ugh, been through this exact scenario. Bank mergers are the worst for this stuff. The new loan officers always want to 'clean up' the files according to their procedures. Sometimes it's necessary, sometimes it's just CYA behavior. I'd suggest getting documentation from both banks about what they think needs to be done before making any changes.
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Abigail Patel
•Good point about getting it in writing. The new bank verbally said we need amendments but haven't put anything formal in writing yet.
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Natalia Stone
•Always get it in writing! Banks love to point fingers later if something goes wrong. Document everything with dates and names.
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Tasia Synder
I ran into something similar last year but with a different type of credit arrangement. Ended up using this document checker tool called Certana.ai that can upload your UCC filings and loan docs to verify if everything aligns properly. It caught some inconsistencies between our original loan agreement and the UCC-1 that we never would have spotted manually. Might be worth running your docs through something like that before deciding what amendments to file.
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Abigail Patel
•That sounds useful - I've been trying to compare the loan docs to the UCC filings manually and it's giving me a headache. How does that tool work exactly?
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Tasia Synder
•Pretty straightforward - you just upload PDFs of your loan agreement, UCC-1, and any amendments. It cross-references the debtor names, collateral descriptions, and filing details to flag any mismatches. Saved me from making unnecessary amendments that could have created more problems.
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Selena Bautista
•Never heard of that but sounds like it could prevent expensive mistakes. Manual doc review is such a pain especially with complex credit arrangements.
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Mohamed Anderson
Letters of credit are definitely a gray area in UCC filings. The issue is whether the LC constitutes 'supporting obligations' under Article 9 or if it's considered a separate general intangible. If your original filing used broad 'all assets' language, you're probably covered, but the new bank might want more specificity for their comfort level.
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Ellie Perry
•This is why I hate vague collateral descriptions. Yeah they might legally cover everything but then you get into these interpretation battles with new lenders.
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Mohamed Anderson
•Exactly. It's often better to be overly specific than to leave room for interpretation, especially with complex credit facilities involving LCs.
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Landon Morgan
Wait, I thought letters of credit were automatically covered under UCC Article 5, not Article 9? Am I missing something here? We have similar arrangements and our attorney never mentioned needing separate UCC filings for the LC components.
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Mohamed Anderson
•Article 5 governs the LC itself, but if you're using the LC as collateral or if there are proceeds from the LC, that falls under Article 9 perfection requirements. It can get complicated depending on the specific arrangement.
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Landon Morgan
•Oh geez, now I'm worried about our own filings. This stuff is way more complex than it seems on the surface.
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Teresa Boyd
•Don't panic yet - most broad collateral descriptions do cover LC arrangements. But it never hurts to have them reviewed, especially if your loans are substantial.
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Lourdes Fox
Had a client go through this exact situation 6 months ago. Bank merger, new loan committee wanted 'clarification amendments' on all UCC filings involving complex credit facilities. We ended up filing UCC-3 amendments just to add explicit LC language to the collateral descriptions. Cost about $400 in filing fees but gave everyone peace of mind.
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Abigail Patel
•That's not too bad cost-wise for the peace of mind. Did you run into any issues with the amendments or did they go through smoothly?
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Lourdes Fox
•Went smoothly. Just make sure your debtor names match exactly between the original filing and the amendment. That's where most amendments get rejected.
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Bruno Simmons
THIS IS EXACTLY WHY THE UCC SYSTEM IS BROKEN!!! Banks merge and suddenly everyone needs to refile everything because the new institution has different 'standards.' Meanwhile borrowers get stuck with extra fees and compliance costs for filings that were perfectly fine before. Sorry for the rant but this stuff drives me crazy.
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Aileen Rodriguez
•I feel your frustration but banks do have legitimate reasons for wanting consistent documentation standards across their portfolio.
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Bruno Simmons
•Maybe, but it always seems to result in more fees and more paperwork for the borrowers. Convenient how that works out.
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Zane Gray
Quick question - are these standby LCs or commercial LCs? The treatment can be different depending on the type and how they're structured in relation to your underlying credit facility.
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Abigail Patel
•Mix of both actually - 2 standby LCs for performance guarantees and 1 commercial LC for equipment purchases. All tied to the same credit agreement though.
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Zane Gray
•That complexity might be why the new bank wants more specific collateral descriptions. Multiple LC types under one facility can create ambiguity about what's actually secured.
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Maggie Martinez
Just went through something similar. Used that Certana tool someone mentioned earlier to check our docs before filing amendments. Found out our debtor name on one filing had a minor variation that could have caused problems. Fixed it with a UCC-3 before it became an issue. Worth checking your docs digitally before making any changes.
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Abigail Patel
•Good catch on the name variation - that's exactly the kind of thing I'm worried about missing. I'll definitely look into that verification tool.
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Alejandro Castro
•Name mismatches are the #1 reason UCC filings get challenged. Better to catch them early than deal with perfection problems later.
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Monique Byrd
Update us on what you decide to do! I have a feeling we might face something similar when our bank gets acquired next year (rumors are swirling). Would be helpful to know how this plays out.
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Abigail Patel
•Will do - going to get the docs reviewed first and then probably file clarifying amendments just to be safe. Better to spend a few hundred now than deal with lien perfection issues later.
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Monique Byrd
•Smart approach. Looking forward to hearing how it goes.
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Aisha Abdullah
I'm dealing with a similar situation right now - our bank was just acquired and the new institution is questioning everything about our UCC filings. From what I've learned so far, it seems like getting a professional review of your existing filings before making any amendments is the safest route. The complexity with multiple LC types under one facility definitely adds layers to consider. Have you thought about getting a second opinion from a UCC attorney who specializes in credit facilities? Sometimes an independent review can clarify whether the new bank's concerns are legitimate or just overly cautious internal policies.
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Julia Hall
•That's really solid advice about getting an independent UCC attorney's opinion. I've been going back and forth on whether to just comply with the new bank's requests or push back, but having a neutral expert weigh in would definitely help me understand if their concerns are valid or just risk-averse policies. The multiple LC types do make our situation more complex than a standard equipment loan. Did you end up finding an attorney who specializes in this area, or are you still searching?
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