Alternatives "A" and "B": Debtor Names Under Revised UCC Section 9-503

Alternatives "A" and "B": Debtor Names Under Revised UCC Section 9-503

Failure to correctly identify a debtor on a financing statement can be fatal to a creditor's attempted filing of a security interest. Newly adopted amendments to Uniform Commercial Code Article 9 are designed to clear up some areas of confusion regarding how debtors' names appear on financing statements. With respect to individuals, the Revision describes two alternatives, which are discussed in this article.


Article 9 of the Uniform Commercial Code is one of the most recently amended articles of the UCC, having just undergone revision in 2001 (the "2001 Revision"). Nonetheless, the complexity of the Code and changing practices in commerce have necessitated further revision. See, Margit Livingston, Bewitched, Bothered, and Bewildered: The Courts and Revised Article 9 of the Uniform Commercial Code Ten Years Later, 9 DePaul Bus. & Com. L.J. 169, 214 (2011). This does not suggest that the 2001 Revision was unsuccessful, as the 2001 Revision clarified numerous outstanding issues. Inconsistent outcomes in some cases and non-uniform amendments to state law, however, led to a perceived need for further revision to Article 9 in light of the desire for greater guidance and predictability for secured transactions generally. Responding to the need for further revision, the American Law Institute (ALI) and the Uniform Law Commission (ULC) commissioned a drafting committee toward further revisions to Article 9. The ALI and ULC have approved amendments that states may now adopt, toward an effectiveness date of July 1, 2013.

One of the issues that led to the Revision was disagreement about how a creditor should best specify the name of the debtor on the financing statement. Some states, such as Texas, passed non-uniform amendments to address the problems. See, e.g., Tex.. Bus. & Com. Code Ann. § 9.503 (2011)  [an annotated version of this statute is available to subscribers] ; Tenn. Code Ann. § 47-9-503 (2011) [annotated version]. Under Section 9-503, a financing statement is not seriously misleading if it lists the name of the debtor indicated on the public record or the debtor's jurisdiction for organizations or simply the name of the individual debtor. The model form provided in Section 9-521 added merely that this be the "exact full legal name." While this might initially appear sufficient guidance, it became apparent that issues remained, such as the inclusion of trade names and how to identify an individual's name when the individual is commonly known by more than one name. Creditors who incorrectly identified the debtor soon found that their financing statement was ineffective because it was seriously misleading. Quite simply, these name errors can be fatal to the creditor's attempted filing of a security interest.

As an example, in Hastings State Bank v. Stainaker (In re EDM Corp.), 431 B.R. 459 (B.A.P. 8th Cir. 2010) [an enhanced version of this opinion is available to subscribers], Hastings State Bank made several loans to EDM Corp., for which it filed first a financing statement in the name of the corporation, but added the words "d/b/a EDM Equipment." The bankruptcy court found that Hastings State Bank was not entitled to priority because the name of the debtor on the financing statement was seriously misleading since the Nebraska Secretary of State's Office search logic did not reveal the financing statement. 461. The court concluded, "[I]n sum, we interpret § 9-503 to mean exactly what it says: if the debtor is a registered organization, then a financing statement 'provides the name of the debtor' only if it 'provides the name of the debtor indicated on the public record of the debtor's jurisdiction of organization' - nothing more and nothing less. Trade names may be added, but not as part of the organizational name itself. Consequently, because [creditor]'s UCC statement added superfluous information to [debtor]'s organizational name, it did not sufficiently provide the name of the debtor.' Id. at 466. See also, In re Jim Ross Tires, Inc., 379 B.R. 670 (Bankr. S.D. Tex. 2007) [enhanced version] (holding that the failure of two creditors to properly record the name of the debtor meant that its secured interest was never perfected and therefore the trustee had a superior lien); Host America Corp. v. Coastline Financinal Inc., 60 U.C.C. Rep. Serv. 2d. 120 (D. Utah 2006) [enhanced version] (finding that the financing statement seriously misleading when it listed "K.W.M." as the debor's name rather than "K W M" with no punctuation).

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