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Creditor 1 - “I’ve filed in my UCC-1. Phew! I just secured $97,000 worth of credit with Acme Corp.” Creditor 2 - “I’ve perfected my PMSI. I just secured $133,000 worth of credit with Acme Corp.” Bankruptcy Court- “Since, Creditor 1 just filled the PMSI and not perfected it, the court concludes that Creditor 2 takes the first priority over the PMSI through the general rule of "first to perfect", "first in line".
The above case puts the former creditor in a situation where they cannot have priority over the debtor's assets in bankruptcy. To obtain priority, the secured party must comply with the UCC perfection and notice requirements. Jerry Bailey from NCS Credit reviews those requirements and explains how to identify and avoid potential traps for the unwary PMSI secured party!!
Key Takeaways:
- What is the right time to perfect a Purchase Money Security Interest?
- Why PMSI perfection shouldn’t be delayed?
- How does a creditor stay compliant with the UCC Article 9 PMSI requirements?
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