Article 9 Financing Statements: Debtor Name Changes under the 2010 Amendments

The 2010 Amendments to UCC Art. 9, effective July 1, 2013, do not make sweeping changes to the overall structure and rules of existing Article 9, but in a few key areas, the drafters have significantly altered the current statutory provisions to simplify and clarify the law. One of those areas involves the debtor's name on filed financing statements.

Excerpt:

Most states have now adopted the 2010 Amendments to U.C.C. Article 9, with an effective date of July 1, 2013, and legislation is pending in all but a handful of the remaining states. See National Conference Commissioners on Uniform State Laws, Legislative Fact Sheet-UCC Article 9 Amendments (2010). The 2010 Amendments do not make sweeping changes to the overall structure and rules of existing Article 9, but in a few key areas, the drafters have significantly altered the current statutory provisions to simplify and clarify the law. One of those areas involves the debtor's name on filed financing statements. The changes to the debtor name rules also affect indirectly the provisions involving post-filing changes to the debtor's name.

Article 9 insists that security parties perfect their security interests to gain priority over most other claimants to the debtor's property. In addition, perfection is necessary for survival of security interests in the event of the debtor's filing for bankruptcy; the trustee in bankruptcy may avoid unperfected security interests under federal law. See U.C.C. §§ 9-317 (Official Text 2009) (giving perfected security interests priority over lien creditors and certain buyers); 9-322 (a) (according perfected senior secured parties priority over later secured parties). See also 11 U.S.C. § 544 (a) (2011) (allowing the trustee in bankruptcy to set aside unperfected security interests). To perfect their security interests, creditors commonly file financing statements in the appropriate public office. U.C.C. § 9-310 (a) (2009). The debtor's name is one of the three essential pieces of information on a financing statement and perhaps the most important one as later creditors typically search the public records by means of the debtor's name. U.C.C. § 9-502 (a) (2009).

Current Article 9 sets forth what constitutes the debtor's "name" for purposes of filing, and the 2010 Amendments attempt to clarify the existing definitions. Under the 2001 version of the statute, the name of a registered organization, such as a corporation or limited liability company, is "the name of the debtor indicated on the public record of the debtor's jurisdiction of organization which shows the debtor to have organized." U.C.C. § 9-503 (a)(1) (2009). The 2010 Amendments modify that definition by stating that a registered organization's name is "the name that is stated to be the registered organization's name on the public organic record most recently filed with or issued or enacted by the registered organization's jurisdiction of organization which purports to state, amend, or restate the registered organization's name." U.C.C. § 9-503 (a)(1) (2010 Amendments). This amendment clarifies that a corporation's name, for example, is the name stated on the corporation's formation documents that are publicly available in a state or federation registration system-in other words, the name on the corporation's public "birth certificate." See U.C.C. § 9-102 (a)(68) (2010 Amendments) (defining "public organic record").

Access the full version of this article with your lexis.com ID. Additional fees may be incurred.

If you do not have a lexis.com ID, you can purchase this commentary and additional Emerging Issues Commentaries from the LexisNexis Store.

Lexis.com subscribers can access the complete set of Emerging Issues Analyses for Commercial (UCC) Law and the Commercial (UCC) Area of Law page.

For more information about LexisNexis products and solutions connect with us through our corporate site.