These transfers are made on account of a pre-existing debt with the effect of favoring certain creditors over others. The good faith of the parties to the transfer is irrelevant. If found to be a preference, the transaction can be voided and recaptured by the debtor and returned to the bankruptcy estate to be equitably distributed to the general pool of creditors.
Because there is no re-perfection under the UCC, a subsequent filing made after a lapse is treated as a grant of new security to secure an antecedent, unsecured debt. If the debtor is insolvent at the time of this filing and it ultimately goes into bankruptcy in 90 days — all the elements of a preference under the U. Bankruptcy Code are satisfied [3] and this grant of security is voidable for giving the creditor more than it would be entitled to under a liquidation.
You must be logged in to post a comment. Legal Paralegal Attorney General Counsel. Blog Latest News Knowledge Center. Post navigation Previous. Share this Leave a Reply Cancel reply You must be logged in to post a comment. The following are some examples: The UCC filing is not filed on the proper form. The appropriate forms are the Tennessee forms prescribed by T. The correct total amount due for the filing fee and recording tax if applicable was not submitted. Note: When an inadequate payment amount for multiple transactions is submitted with a UCC3, all transactions are rejected.
When filing an amendment, the initial financing statement file number is not legible or cannot be matched to an un-lapsed initial financing statement. For a continuation, the record is not filed within the six month window prior to the lapse date.
In the event of an assignment, the filing fails to legibly provide the name and mailing address of the assignee. When an initial financing statement or an amendment that increases the maximum principal indebtedness does not include the required indebtedness language.
A check could not be honored. How can I find out the status of a UCC filing? How do I get the forms to use? Can I use my credit card? What does the indebtedness language mean? Why is my name on the UCC form? We index information in the UCC system based upon the name of the debtor. Division of Business Services. CERT tn. G A record of a mortgage that is effective as a financing statement filed as a fixture filing under division C of section Eff The effective date is set by section 4 of SB Official Comment 1.
Former section 2 , 3 , and 6. Period of Financing Statement's Effectiveness. Subsection a states the general rule: A financing statement is effective for a five-year period unless its effectiveness is continued under this section or terminated under section Subsection b provides that if the financing statement relates to a public-finance transaction or a manufactured-home transaction and so indicates, the financing statement is effective for 30 years.
These financings typically extend well beyond the standard, five-year period. Under subsection f , a financing statement filed against a transmitting utility remains effective indefinitely, until a termination statement is filed. Likewise, under subsection g , a mortgage effective as a fixture filing remains effective until its effectiveness terminates under real property law.
When the period of effectiveness under subsection a or b expires, the effectiveness of the financing statement lapses. The last sentence of subsection c addresses the effect of lapse. The deemed retroactive unperfection applies only with respect to purchasers for value; unlike former section 2 , it does not apply with respect to lien creditors. Example 1: SP-1 and SP-2 both hold security interests in the same collateral.
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