Filling Out Article 9 Financing Statements: Use of Approved Forms

A secured party's failure to use approved forms to provide the names of additional debtors was fatal to its security interests in those debtors' assets. Secured parties who are listing multiple debtors should use the approved forms for providing the names. Or they should file additional financing statements so that each debtor's name appears on the first page of the financing statement. Use of approved forms is discussed in this article.

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For secured parties, the key to attaining priority over other claimants and survival of their security interests in bankruptcy is perfection of their security interests, usually through the filing of an appropriate financing statement in the proper public office under Article 9 of the Uniform Commercial Code. See UCC §§ 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); 9-310(a) (mandating the filing of a financing statement as the method of perfection in most cases). See also 11 U.S.C. § 544(a) (2011) (allowing the trustee in bankruptcy to set aside unperfected security interests) [an annotated version of this statute is available to lexis.com subscribers]. The publicly filed financing statement gives notice to the world of the secured creditor's interest in certain assets of the debtor and allows other creditors to adjust their behavior accordingly. The requirements for a filed financing statement are quite minimal - the debtor's name, the name of the secured party or its representative, and an indication of the collateral. UCC § 9-503(a). Nevertheless, secured parties often have trouble complying with these fundamentals and find themselves out in the cold in bankruptcy, demoted to the status of a lowly unsecured creditor. In a recent bankruptcy case, the secured party's failure to use approved forms to provide the names of additional debtors proved fatal to its security interests in those debtors' assets. Official Committee of Unsecured Creditors v. Regions Bank (In re Camtech Precision Manufacturing, Inc.) (hereafter Camtech), 443 B.R. 190 (Bankr. S.D. Fla. 2011) [an enhanced version of this opinion is available to lexis.com subscribers].

In Camtech, the secured party, Regions Bank, had filed financing statements listing four debtors in New York and Florida in September and October of 2007. 443 B.R. at 192. The first debtor was listed in the debtor name box, the second in the additional debtor box on the first page of each UCC financing statement. 443 B.R. at 193. Two additional debtors, Camtech and Avstar Fuel, were listed on a plain piece of paper attached as a second page to the UCC financing statement. Although both Florida and New York recognized approved "additional debtor" forms, the Bank chose not to use them. 443 B.R. at 193.

In May 2010, Camtech and Avstar Fuel filed voluntary petitions under Chapter 11 of the Bankruptcy Code. Camtech, 443 B.R. at 192. The Bank asserted perfected security interests in substantially all of the debtors' personal property and claimed an unpaid loan balance of over $4 million. The Official Committee of Unsecured Creditors filed an adversary proceeding against the Bank, alleging that the Bank's security interests in Camtech and Avstar Fuel's property were unperfected. The Committee sought to demote the Bank to unsecured creditor status and to force disgorgement of adequate protection payments made to the Bank with respect to its security interests. 443 B.R. at 192.

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