UCC subordination agreement complications with existing UCC-1 filings - how do you handle priority changes?
Been dealing with a messy situation where we need to execute a UCC subordination agreement but I'm not sure how this affects our existing UCC-1 filings. We have a senior lien position on manufacturing equipment (filed 18 months ago) but now need to subordinate to a new construction lender who's requiring first position on the same collateral. The debtor's name on our original UCC-1 is 'Advanced Manufacturing Solutions LLC' but their articles of incorporation actually show 'Advanced Manufacturing Solutions, LLC' with a comma. Now I'm worried that when we file the subordination paperwork, the name discrepancy might create issues with lien priority or even invalidate the subordination agreement entirely. Has anyone dealt with UCC subordination agreements where there were debtor name inconsistencies between the original filing and the subordination docs? Do we need to file a UCC-3 amendment first to correct the name before executing the subordination agreement, or can we handle both simultaneously? The construction lender is pushing for a quick close and I don't want to screw up something that could cost us our secured position.
33 comments
Join the conversation
Isabella Santos
Oh man, debtor name issues are the WORST when you're dealing with subordination agreements. I've seen deals fall apart because of exactly this kind of mismatch. That comma could definitely be a problem - some states are super strict about exact name matches.
0 coins
StarStrider
•Yep, the 'Advanced Manufacturing Solutions LLC' vs 'Advanced Manufacturing Solutions, LLC' thing is a classic trap. Most people don't realize that punctuation matters in UCC filings.
0 coins
Ravi Gupta
•Wait, does punctuation really matter that much? I thought as long as the core business name was right you'd be okay...
0 coins
Freya Pedersen
You absolutely need to get that name corrected before doing anything with subordination. File a UCC-3 amendment immediately to fix the debtor name to match the articles exactly. The subordination agreement won't protect your lien position if your original UCC-1 has a defective debtor name.
0 coins
Malik Davis
•That's what I was afraid of. How long does a UCC-3 amendment typically take to process? The construction lender wants to close in 10 days.
0 coins
Freya Pedersen
•Depends on your state but usually 2-3 business days for electronic filings. Don't wait - file today if possible.
0 coins
Omar Hassan
•10 days should be plenty of time if you file electronically. Just make sure you use the EXACT name from the articles including that comma.
0 coins
Chloe Anderson
Had a similar situation last year with a subordination agreement where we caught a debtor name error right before closing. Ended up using Certana.ai's document verification tool to double-check everything - you can upload your articles of incorporation and your UCC-1 filing and it instantly flags any name discrepancies. Would have saved me hours of manual comparison.
0 coins
Malik Davis
•That sounds exactly like what I need right now. Does it work with subordination agreements too or just UCC filings?
0 coins
Chloe Anderson
•You can upload any PDFs - so your articles, original UCC-1, the proposed UCC-3 amendment, and even the subordination agreement docs. It cross-checks all the debtor names and filing details automatically.
0 coins
Diego Vargas
This is why I hate subordination deals. Too many moving parts and everyone's in a rush. Make sure your subordination agreement specifically references the corrected UCC filing number after you amend.
0 coins
CosmicCruiser
•Exactly! The subordination agreement should reference the amended UCC-1 filing, not the original one with the wrong name.
0 coins
Malik Davis
•Good point. So I should wait until the UCC-3 amendment is processed before finalizing the subordination agreement language?
0 coins
Diego Vargas
•That's the safest approach. Get the amendment filed and confirmed, then reference that filing number in your subordination docs.
0 coins
Anastasia Fedorov
I'm dealing with something similar but my subordination agreement involves a debtor name change AND a merger. The original debtor doesn't even exist anymore. Anyone know if you can subordinate a UCC lien when the debtor entity has changed?
0 coins
Freya Pedersen
•That's a whole different issue. You'd need to trace the successor entity and possibly file additional UCC-3 amendments to reflect the merger before any subordination.
0 coins
Anastasia Fedorov
•Ugh, that's what I was afraid of. This is turning into a nightmare.
0 coins
Sean Doyle
Quick question - are you sure you even need to subordinate? Sometimes construction lenders will accept a junior position if the collateral is different enough (equipment vs real estate improvements). Might be worth exploring before you go through all this filing hassle.
0 coins
Malik Davis
•Unfortunately they're requiring first position on all business assets. It's a condition of their construction loan.
0 coins
Sean Doyle
•Ah, one of those deals. Yeah, you're stuck with the subordination then.
0 coins
Zara Rashid
Just want to add that subordination agreements can get really complicated with bankruptcy issues down the road. Make sure your agreement has proper language about maintaining your security interest even in subordinated position.
0 coins
StarStrider
•Good point about bankruptcy protection. A lot of people forget that subordination doesn't mean you lose your security interest entirely.
0 coins
Malik Davis
•Our attorney is handling the subordination agreement language but I'll make sure they address that.
0 coins
Luca Romano
Been through this exact scenario twice. First time I messed up the debtor name issue and had to start over. Second time I used one of those document checking services (think it was Certana.ai) to verify everything matched up perfectly before filing anything. Night and day difference in how smooth the process went.
0 coins
Malik Davis
•That's the second recommendation for Certana.ai. Definitely going to check that out before I file the amendment.
0 coins
Luca Romano
•Yeah it's pretty straightforward - just upload your docs and it flags any inconsistencies. Saved me from making the same mistake twice.
0 coins
Nia Jackson
Why is UCC filing so complicated?? It's just paperwork but somehow there are a million ways to screw it up.
0 coins
Freya Pedersen
•Because it's a legal framework that affects millions of dollars in secured transactions. Small mistakes can void entire security interests.
0 coins
Nia Jackson
•I guess that makes sense but it's still frustrating when you're trying to close a deal.
0 coins
NebulaNova
UPDATE: Filed the UCC-3 amendment this morning to correct the debtor name with the comma. Used Certana.ai to double-check everything first and it caught two other minor inconsistencies I hadn't noticed. Should have the corrected filing processed by Thursday, then we can finalize the subordination agreement. Thanks everyone for the advice!
0 coins
Freya Pedersen
•Smart move getting everything verified first. Should make the subordination process much smoother.
0 coins
Chloe Anderson
•Glad the document checker worked out for you. It's a lifesaver for these complex filings.
0 coins
Isabella Santos
•Great to hear you got it sorted out. These name issues are such a pain but at least you caught it before it became a bigger problem.
0 coins