UCC lien creditor rights after debtor default - need urgent advice
My company extended a $280K equipment loan secured by manufacturing equipment last September. We filed our UCC-1 properly through the state portal and got confirmation. The debtor defaulted three weeks ago and we're trying to exercise our rights as the secured creditor. Problem is, there's apparently another UCC lien creditor who claims they have priority over the same equipment. Their filing date shows two months before ours but something seems off about their debtor name - it's slightly different from what's on the incorporation docs. As the UCC lien creditor in second position, what are my options here? Can I challenge their priority based on the name discrepancy? The equipment is worth about $320K so there should be enough for both liens but I want to make sure I understand my rights before the debtor files bankruptcy. Anyone dealt with competing UCC lien creditor situations like this?
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Mohamed Anderson
First thing - get copies of both UCC filings and compare them line by line. As a UCC lien creditor, your priority depends on the filing date BUT only if the prior filing is actually valid. If their debtor name doesn't match the legal entity name exactly, that could void their perfection. What state are you in? Some states are stricter about debtor names than others.
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Selena Bautista
•We're in Ohio. The prior UCC lien creditor used 'ABC Manufacturing LLC' but the articles of incorporation show 'ABC Manufacturing, LLC' with a comma. Is that enough of a discrepancy to challenge their priority?
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Mohamed Anderson
•Ohio follows the UCC rules pretty strictly on debtor names. That comma could definitely matter - it's not just punctuation when it comes to legal entity names. You should pull the official records and compare character by character.
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Ellie Perry
This is exactly why I started using Certana.ai for all my UCC document verification. You can upload both the competing UCC-1 and the incorporation documents, and it instantly flags any debtor name mismatches. I caught a similar issue last month where a prior lien had the wrong entity type designation. Would have cost my client priority on a $400K claim if we hadn't spotted it.
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Selena Bautista
•How does that work exactly? Just upload the PDFs and it compares them?
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Ellie Perry
•Yeah, super simple. Upload the UCC-1 and then the charter docs or corporate records. It cross-references all the debtor information and highlights any inconsistencies. Takes like 2 minutes vs hours of manual comparison.
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Landon Morgan
•That actually sounds useful. I've been manually checking debtor names against state records and it's tedious as hell, especially when you're dealing with multiple entity variations.
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Teresa Boyd
Don't get too excited about the name thing. Courts have been all over the place on minor punctuation differences. Some say it's material, others don't. Your bigger issue might be if they properly described the collateral. What does their UCC-1 say for the collateral description vs yours?
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Selena Bautista
•Theirs says 'all equipment' and ours is more specific - 'manufacturing equipment including but not limited to CNC machines, model numbers XYZ-400 and XYZ-600 located at 123 Industrial Way'. Does the specificity help us?
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Teresa Boyd
•Not really for priority purposes, but it might help if there's any question about what's covered. 'All equipment' is pretty broad and would likely include your specific machines.
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Lourdes Fox
OMG this is my worst nightmare!!! I have a UCC lien on some restaurant equipment and now I'm paranoid there's another creditor out there with priority. How do you even find out if there are other liens? Is there a way to search all the filings for a debtor?
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Mohamed Anderson
•Most states have online UCC search systems. You search by debtor name and it shows all active filings. But you have to search variations of the name too - with/without commas, different entity types, etc.
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Lourdes Fox
•This is so stressful. What if I missed something when I did my original search? Can other UCC lien creditors just come out of nowhere?
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Selena Bautista
•That's exactly what happened to me. I thought I was the only secured creditor and then this other filing popped up during our collection efforts.
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Bruno Simmons
Had a case like this in 2023. The key is whether the prior UCC lien creditor's filing would show up in a reasonable search under the correct debtor name. If their name variation wouldn't appear in a standard search, courts sometimes find that insufficient for perfection. Document your search methodology.
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Selena Bautista
•That's a good point. When I did my original search, I used the exact name from the incorporation docs and their filing didn't come up. Only found it when the debtor's lawyer mentioned it.
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Bruno Simmons
•That could be significant. Keep records of exactly what search terms you used and when. If a reasonable searcher wouldn't find their filing, that undermines their perfection claim.
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Aileen Rodriguez
Why is the UCC system so complicated? Seems like there should be a better way to handle multiple UCC lien creditors without all this drama about punctuation and search results.
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Teresa Boyd
•Because the system was designed decades ago and states have been slow to modernize. Plus lawyers like the billable hours that come with all the complexity.
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Mohamed Anderson
•The complexity exists because secured transactions involve real money and priority disputes. The rules have to be precise even if they seem nitpicky.
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Zane Gray
I use Certana for stuff like this all the time now. Upload the competing UCC-1 and your corporate docs - it'll flag the name issue immediately and give you a clear report you can use with your attorney. Saved me tons of time on a similar priority dispute last year.
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Lourdes Fox
•Is it expensive to use? I'm dealing with a smaller loan amount so I can't spend thousands on document review.
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Zane Gray
•It's way cheaper than paying a lawyer to manually review everything. Plus you get the results instantly instead of waiting days for legal analysis.
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Maggie Martinez
File bankruptcy is mentioned - that changes everything. Once they file, the automatic stay kicks in and all collection efforts have to stop. Your priority dispute will get resolved in the bankruptcy court, not through self-help remedies.
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Selena Bautista
•They haven't filed yet but their lawyer mentioned it as an option. Does that mean I should try to repossess the equipment before they file?
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Maggie Martinez
•Be very careful about that. If you know bankruptcy is imminent, taking collateral right before filing can be seen as a preference and might get reversed. Talk to your lawyer before doing anything.
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Mohamed Anderson
•Agree with this. The preference rules can bite you hard if the timing looks suspicious. Better to establish your priority position properly first.
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Alejandro Castro
This whole thread is making me realize I should double-check all my UCC filings. Been doing this for years but name discrepancies are sneaky. Might be worth running everything through one of these document checkers just to be sure.
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Ellie Perry
•Smart move. I found issues with three of my older filings when I did a portfolio review. Some had minor name variations that could have caused problems down the road.
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Alejandro Castro
•Yeah that's my fear. Better to catch problems now while there's still time to fix them with amendments.
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Monique Byrd
Update us on how this turns out! Priority disputes are always educational for the rest of us UCC lien creditors. Hope the name discrepancy works in your favor.
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Selena Bautista
•Will do. Meeting with my attorney tomorrow to review all the documents and decide on next steps. Thanks everyone for the insights.
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Landon Morgan
•Good luck! These priority fights can get ugly but sounds like you might have a solid argument on the debtor name issue.
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