ucc 1 assignment

• Search Search Please fill out this field.
• Corporate Finance
• Corporate Debt

UCC-1 Statement: Definition, Types, and Example

Charlene Rhinehart is a CPA , CFE, chair of an Illinois CPA Society committee, and has a degree in accounting and finance from DePaul University.

Dennis Madamba / Investopedia

What Is a UCC-1 Statement?

A UCC-Uniform Commercial Code-1 statement is a legal notice filed by creditors to publicly declare their rights to potentially obtain the personal properties of debtors who default on business loans they extend. Often abbreviated as UCC-1, these notices are typically printed in local newspapers to alert the masses of the creditors’ intentions.

UCC-1s are required for all business loans under the Uniform Commercial Code (UCC) and establish a relative priority over which specific assets may be seized, and in what order, while solidifying the collection pecking order in cases where there are multiple lenders to the same debtor.

Key Takeaways

• A UCC-Uniform Commercial Code-1 (UCC-1) statement is a legal notice filed by creditors in an effort to publicly declare their right to seize assets of debtors who default on loans.
• UCC-1 notices are typically printed in local newspapers, in an effort to publicly express a lender’s intent to seize collateralized assets. 
• These forms are mainly used to smooth out collection processes, often by helping lenders secure court orders authorizing them to seize assets from delinquent borrowers.
• These forms must be filed with agencies located in the state where the borrower’s business is incorporated.
• There are two types of UCC-1 statements: blanket liens, and liens attached to specific collateral.

Understanding UCC-1 Statements

The UCC-1 statement serves as a lien on secured collateral , where the components and filing procedures are comparable to the lien requirements in residential mortgage loan contracts. The UCC-1 statement is a directive of the Uniform Commercial Code (UCC), which governs business deals and activities in the United States.

According to the ninth article of the UCC, titled “Secured Transactions,” a lender must incorporate completed UCC-1 statements in a business loan’s contract for it to be deemed effective. The statements must include detailed information about the borrower, and they must itemize descriptions of all assets named as the secured collateral for the loan. While virtually any type of asset may serve as such collateral, the most commonly used items include real estate properties, motor vehicles, manufacturing equipment, inventory, and investment securities such as stock and bond holdings.

As with any ordinary lien, lenders must perfect the UCC-1 statement by filing it with the appropriate agency in the state where the debtor company is incorporated. In most cases, UCC-1 statements are filed with the secretary of state’s office, which subsequently time-stamps the document and assigns a file number to the associated parties.

In industry jargon, the process of issuing UCC-1 notices is referred to as “perfecting the security interest” in the debtor’s property.

Types of UCC-1 Statements

Lenders have the option of filing the following two types of UCC-1 statements:

• Specific collateral UCC-1 statements . These are most commonly used in real estate or equipment transactions. They give lenders first-order secured rights to real estate properties or specific collateral such as the equipment purchased with the loaned funds.
• Blanket lien . This gives the lender secured rights to a range of assets, as long as the terms of these liens are detailed in the collateral section of the UCC-1 statement. Lenders tend to prefer blanket or “all-asset” liens.

How a UCC Filing Affects Credit Scores

Like individuals, most businesses have a credit report and score . While a UCC lien will appear on a business’ credit report, it won’t necessarily have an immediate negative impact on the business’ credit score, unless the business should default on the underlying loan.

The loan attached to the UCC filing will also increase a business’ credit utilization ratio , which, if it gets too high, can negatively impact the score. Furthermore, the business won’t be able to use the same piece of property as collateral for a different loan if there is a lien attached to it.

Example of a UCC-1 Statement

Say a construction company named Alex’s Excavation applies for a business loan to purchase two new hydraulic excavators. Bank XYZ is interested in offering Alex a loan, and as part of the contract, it files a UCC-1. Shortly afterward, Alex’s Excavation loses one of its biggest construction contracts, and then another, and the company is forced to file for bankruptcy .

Because the company had several lenders, it’s likely that Bank XYZ would not be given first-order rights to Alex’s property and would have to wait until all other lenders were paid. However, because the bank filed a specific collateral lien on the two excavators, it received the property/cash mentioned in the UCC-1 statement in a timely fashion.

What are the benefits after filing a UCC-Uniform Commercial Code-1 (UCC-1) statement?

Filing a UCC-1 statement allows creditors to collateralize or “secure” their loan by utilizing the personal property assets of their customers. In the event of a customer defaulting on their loan or filing for bankruptcy, a UCC-1 elevates the lender’s status to a secured creditor, ensuring that it will be paid.

How do you remove a UCC filing?

While rules vary by state, there are essentially two ways to remove a UCC lien:

• The first is to ask the lender to immediately remove the lien upon full payment of the loan by filing a UCC-3 statement.
• The other option, if your lender fails to file a UCC-3 after you’ve paid off the loan, is to visit your local secretary of state’s office and swear under oath that you have fulfilled the debt in full and request to have the UCC-1 removed.

How long does a UCC filing last?

A UCC-1 statement is effective for five years. After this five-year period, the lien becomes null and void.

What is a continuation statement?

A continuation statement is an amendment attached to a UCC-1 financing statement. Continuation statements extend the lender’s lien on the borrower’s collateral past the original financing statement’s expiration date. When a lender files a continuation statement, the continuation statement extends the UCC-1 financing statement by five years from the date of filing.

The Bottom Line

UCC filings let creditors notify other creditors about a debtor’s assets that are used as collateral for a secured transaction. UCC liens filed with the appropriate secretary of state’s offices serve as public notice of the creditor’s interest in the assets. To check for UCC filings, visit your secretary of state’s website.

National Association of Secretaries of State. “ UCC Filings .”

• Terms of Service
• Editorial Policy
• Privacy Policy
• Your Privacy Choices

• Frost Brown Todd

When Your Vendor’s Lender Demands You Pay It Instead of Your Vendor

Apr 22, 2020

Categories:

Blockchain and Banking Blog Blogs Coronavirus Response Team Tax & Finance Considerations

Vincent E. Mauer

A commercial lender’s favorite collateral is often a borrower’s accounts receivable. This collateral is the building block of countless revolving lines of credit that provide borrowers with working capital and flexibility. Lenders prefer accounts receivable as collateral because it is similar to cash, unlike collateral that must be fed and liquidated (assets that must be insured, stored, marketed and sold). Additionally, the Uniform Commercial Code (“UCC”) permits lenders to collect accounts receivable directly from the borrower’s customers without using judicial process, thus saving time and money. [1]

After a loan agreement “goes bad” and the lender declares a default, the lender’s options for collection of accounts receivable collateral include giving notice to persons whose accounts owed to a borrower were pledged by that borrower to the lender (the borrower’s customer is a “payor”), [2] that is, accounts receivable in which the lender has a UCC Article 9 Security interest. [3] The primary operative provision is UCC 9-406, which states in part:

• Subject to subsections (b) through (i), an account debtor on an account , chattel paper , or a payment intangible may discharge its obligation by paying the assignor [borrower] until, but not after, the account debtor receives a notification, authenticated by the assignor or the assignee that the amount due or to become due has been assigned and that payment is to be made to the assignee. After receipt of the notification, the account debtor [ payor] may discharge its obligation by paying the assignee [Lender] and may not discharge the obligation by paying the assignor [Borrower] .
• Subject to subsection (h), notification is ineffective under subsection (a): (1) if it does not reasonably identify the rights assigned; (2) . . . [a limitation applicable to payment intangibles that are not accounts   receivable, for example insurance settlements]; or (3) at the option of an account debtor, if the notification notifies the account debtor to make less than the full amount of any installment or other periodic payment to the assignee, even if: (A) only a portion of the account , chattel paper , or payment intangible has been assigned to that assignee; (B) a portion has been assigned to another assignee; or (C) the account debtor knows that the assignment to that assignee is limited. [4]
• Subject to subsection (h), if requested by the account debtor [ payor], an assignee [lender] shall seasonably furnish reasonable proof that the assignment has been made . Unless the assignee complies, the account debtor may discharge its obligation by paying the assignor, even if the account debtor has received a notification under subsection (a).

(Emphases added.) Ordinarily, the above-quoted statute means that, after a borrower defaults, the lender can give a “notification” to its borrower’s customers ( payors) [5] and demand that amounts owed to the borrower instead be paid to the lender if the lender has a perfected security interest in its borrower’s receivables.

There are a few common concerns faced by our payor clients who receive notifications from their secured vendor’s secured lenders.

The first thing a  payor must understand is that neither (a) the borrower’s granting of a security interest in its accounts receivable, nor (b) a lender’s notification under UCC 9-406, will change the amount owed, the terms of the account debt, or the payor’s rights such as a discount for returned merchandise or prompt payment. A  payor who receives a lender’s notification should, therefore, take a deep breath and determine exactly what is owed to the vendor that granted the security interest to the lender.

In my experience,  payors who receive a lender’s notification nearly always choose to alert their vendor (the lender’s borrower) of the notification. The statute neither permits nor prohibits such action. Typically, the payor’s communication is, in part, an effort by the payor to (i) alert its vendor that a payment may not be coming, (ii) assess the vendor’s stability so the payor can determine if it needs to find a new source for the goods and services supplied by the vendor, and (iii) to seek information on whether the lender’s notification is real and appropriate.

Contacting the vendor is understandable. It is natural for a  payor to seek information from the party with whom it regularly does business rather than a probable stranger, the lender. Vendor-provided information, however, comes with a caveat: If the vendor asserts that the lender’s notice to the payor is in error and should be ignored, the payor accepts that advice at its own risk. The UCC provision quoted above clearly states that a  payor who has received an appropriate lender’s notification cannot discharge its debt to the vendor by paying the vendor instead of the lender.

Rather, or in addition to, contacting the vendor, a  payor can choose to contact the lender and request evidence that payment to the lender is appropriate. In this event, the UCC requires the lender to provide “reasonable proof that the assignment was made.” This usually means evidence that the vendor granted a security interest to the lender and that the accounts receivable created by the payor’s debt to the vendor is covered by that security interest. A  payor should take advantage of this opportunity to communicate with the lender and request “proof,” if either (a) the vendor asserts that the lender’s notice to payor is wrongful, or (b) the lender’s “notification” seems inadequate. This is a proper response to payor’s concerns. [6]

In my experience, lenders often ignore a  payor’s request for “proof” following a lender’s “notification.” There are many possible reasons for this inaction by the lender. [7] Whatever the rationale, however, the result is the same. According to UCC 9-406 comment 4:

[e]ven if the proof is not forthcoming, the notification of assignment would remain effective, so that, in the absence of reasonable proof of the assignment, the account debtor could discharge the obligation by paying either the assignee or the assignor. Of course, if the assignee [lender] did not in fact receive an assignment, the account debtor [ payor] cannot discharge its obligation by paying a putative assignee who is a stranger [a fraudster] .

(Emphasis added). Given the last sentence in this comment, the only safe action by payor is payment to the vendor, not the lender, if the lender failed to respond to payor’s request for “proof.”

As noted above, the lender’s notification to payor does not alter the terms of the payor’s obligations to the vendor. For example, if a  payor has received a notification from a lender and has requested reasonable proof of the assignment, payor may discharge its obligation by paying the assignor at the time when payment is due, even if the account debtor has not yet received a response to its request for proof. This is a warning for lenders to think about their borrower’s collection cycle when sending notifications to payors.

If a  payor deals with a large vendor or one with diverse operations, the vendor may have more than one secured lender. Vendors can have two or more secured creditors each with a security interest in the vendor’s accounts payable. [8] Sophisticated payors will often discover this fact when they do an online search with the appropriate Secretary of State’s office. Unfortunately, the UCC’s official commentary is silent on the payor’s duties in this situation. See, however, comment 7 to UCC 9-406:

For example, an assignor [vendor] might assign the same receivable to multiple assignees [. . . .] Or, the assignor could assign the receivable to assignee-1, which then might re-assign it to assignee-2, and so forth. The rights and duties of an account debtor in the face of multiple assignments and in other circumstances not resolved in the statutory text are left to the common-law rules. See, e.g., Restatement (2d), Contracts Sections 338(3), 339.

When faced with this problem, counsel must determine which state’s common law applies and find the non-UCC answer from applicable law.

Finally, clients often ask whether a particular lender notification is an appropriate and effective “authenticated” notification. The answer depends on the circumstances of the notification. Fortunately, there are plenty of court decisions that can provide guidance on this question. One example is Swift Energy Operating, LLC v. Plemco-South Inc. , 157 So.3d 1154 (La. Ct. App. 2015), where a borrower did business with an account receivable factor, the secured party. The borrower and factor sent an email to the payor which was the alleged lender notification under Louisiana’s version of UCC 9-406. In response to that email, the payor’s employee directed the lender to contact the payor’s appropriate office. The payor’s employee, however, did not sign and return the acknowledgment that payor received the lender’s notification. The lender subsequently failed to contact the payor’s accounts payable office as directed and the payor paid its obligation to the vendor rather than the lender/account receivable factor. Litigation was initiated in an effort to determine if payor was nonetheless liable to the lender for failure to follow the lender’s notification.

The Louisiana Court of Appeals held that the email was not an “authenticated” notification in compliance with the statute. The court reasonably held that the required notice must be directed to the appropriate payor department or employee when the lender has notice of that department. The court ruled:

[W]e find that the notice required by La.R.S. 10:9-406(a) was not effected prior to Swift Energy’s payment to Plemco–South. Given the size of its operation, we find that Swift Energy maintained reasonable routines for communicating significant information through its departmentalization policy, and both Factor King and Plemco–South were timely made aware of the proper department for delivery of the required notice. Had either Ms. Gleberman or Mr. Stigall followed Ms. Keo’s instruction, notice would have been effected to the appropriate department well before the payment to Plemco–South at issue.

Id. at 1164.

The UCC’s provision for nonjudicial collection of accounts receivable collateral is important and valuable to lenders. Unfortunately, it regularly raises questions and concerns for recipients of lender notifications. Experienced counsel can help their payor clients resolve concerns, determine who to pay, and possibly smooth any tensions between the payor and its vendor by demonstrating that the payor exercised every opportunity to protect the vendor before paying the lender.

For more information, please contact Vince Mauer or any attorney in Frost Brown Todd’s Financial Services industry team.

[1]  This post does not address a lender’s efforts to control accounts receivable collateral while the lending relationship is intact, such as use of a lockbox to receive payments and control over the borrower’s bank accounts into which the accounts receivable payments are deposited by the borrower (whether by check or wire transfer).

[2]  For purposes of this blog post, I will use the term “Payor” for the borrower’s customer who owes money to the borrower and whose debt to borrower is subject to a security interest in favor of the lender. This blog post is written from a Payor’s perspective.

[3]  A warning for lenders: According to the Ohio Supreme Court, this remedy is not fully available against the collateral of a borrower whose customer, the Payor, is a government entity. See MP Star Financial Inc. v. Cleveland State Univ. , 837 N.E.2d 758 (Ohio 2005) ( “provision of UCC making an account debtor liable to an assignee of accounts receivable, for payments made to assignor after receiving notice of assignment, does not apply to payments made by an account debtor that is a governmental unit.”).

[4]  Under subsection (b)(3), an account debtor that is notified to pay an assignee less than the full amount of any installment or other periodic payment has the option to treat the notification as ineffective, ignore the notice, and discharge the assigned obligation by paying the assignor [vendor]. This is a convenience for Payors and a warning to lenders.

[5]  For the typical recipient of this notice (a Payor), the borrower whose account was assigned is a vendor, a business that sells goods or services to you and grants its lender a security interest in the account receivable generated by that sale.

[6] Comment 3 to UCC 9-406 states: “[i]f an account debtor [Payor] has doubt as to the adequacy of a notification, it may not be safe [for the Payor] in disregarding the notification unless it [Payor] notifies the assignee [lender] with reasonable promptness as to the respects in which the account debtor considers the notification defective.” So, a Payor with concerns may be better off to seek information from the lender rather than making its own decision concerning the adequacy of the notification.

[7]  I have occasionally counseled lender clients to ignore a Payor’s request for “proof.” The reasons for this advice are beyond the scope of this blog post.

[8]  Hopefully, there is an Intercreditor Agreement addressing lien priorities and which lender(s) can send a lender notification.

Before you send us any information, know that contacting us does not create an attorney-client relationship. We cannot represent you until we know that doing so will not create a conflict of interest with any existing clients. Therefore, please do not send us any information about any legal matter that involves you unless and until you receive a letter from us in which we agree to represent you (an "engagement letter"). Only after you receive an engagement letter will you be our client and be properly able to exchange information with us. If you understand and agree with the foregoing and you are not our client and will not divulge confidential information to us, you may contact us for general information.

First Corporate Solutions

"FCS online system really helped us manage our transactions and cut costs. I get what I need at my fingertips, accurately and easily. And when I need to contact someone there’s always an actual person who responds."

Natalie M., Credit Manager, National Bank, Chicago, IL

"FCS educational resources are simply the best in the industry. I have downloaded numerous articles from their resources library and I keep on coming back for more."

Margie S., Paralegal, Fortune 500 Law Firm, Los Angeles, CA

Our mission is to blend technology and personalized customer service to deliver the most responsive, efficient and accurate risk mitigation solutions.

Risk Management Blog

Ucc & corporate due diligence resource guide for legal and financial professionals, 5 types of ucc3 change statements.

It’s an amendment filing to an original UCC1 financing statement that changes or adds information to the originally filed UCC1. It’s a filing tool secured parties use to manage their UCC portfolio to maintain their perfected security interests.

Importantly, • the timing of UCC3 recording execution • the accuracy of the data changes or additions • and choosing the correct amendment type can all be critical to maintaining a perfected security interest and the original UCC1 priority position.

Before discussing what a UCC3 is, its various types and how they are utilized, a quick review of UCC1s is in order. UCC1 financing statements are recorded filings which give notice to other creditors of a security interest in specific collateral used to secure debt. They are typically recorded to perfect the security interests of a secured party to prioritize their claim position in the event of a debtor default. UCC1s are subject to the effects of subsequently filed documents, whether those documents attach to the original filing, like a UCC3, or not, like a Federal tax lien.

Some of these subsequently filed documents can prime a perfected security interest, like Federal tax liens.

Others, like UCC3s if not executed according to statute, can cause a secured party to lose effectiveness of their lien, their UCC1, and all claims on any collateral should there be a default.

It’s that last piece that is vitally important about UCC3s: they can affect previously perfected security interests depending on when and where they are recorded, what they do, and how accurate the new data is.

What are the Different Types of UCC3s?

There are five different types of UCC3s.

• Continuations – extends the financing statement effectiveness for another five years;
• Party Amendments – adds or amends debtor or secured party information, such as changes to the legal name or the address
• Collateral Amendments – adds or removes collateral from the collateral description, or restates the collateral description completely
• Assignments – transfers “full” or “partial” rights in the filing from one secured party to another
• Terminations – extinguishes a financing statement prior to its five-year lapse date

Where and how are UCC3s recorded?

UCC3s are recorded in the same jurisdiction as the effective UCC1 it amends. A step by step process on how to execute a UCC3 filing can be found here .

What are some examples of the critical nature of each UCC3 type?

• Continuations – there is a 6 month window prior to the UCC1 5-year lapse date in which a Continuation must be recorded for it to be effective; Continuations are not effective if recorded after the lapse date and the UCC1 lapses and becomes ineffective
• Party Amendments – these amendments often coincide with name changes and/or address changes to business entity documents of the parties involved; these name changes and address changes typically require amendments to the original UCC1 identifying these changes within a specific time frame; address changes that involve a change of state have specific UCC3 filing protocols for secured parties to follow within specific time frames
• Collateral Amendments – partial releases are executed as a DELETE collateral descriptions, a critical aspect of this type of UCC3; a collateral restatement  is a replacement of a prior collateral description, not an addition to that prior description, so a secured party’s security interest in any collateral that is not fully restated in the UCC3 collateral amendment risks becoming unperfected
• Assignments – sometimes a new UCC1 is required instead of an assignment, depending, and failure to recognize what is required in a situation can result in a secured party’s lien becoming ineffective
• Terminations – other parties can terminate a UCC1 besides the secured party; also, RA9 requires no signatures to record terminations; a termination can be recorded by the debtor under certain circumstances; monitoring services are available which alert secured parties to when another party files a termination on one of their UCCs; contact the secured party to verify the effectiveness of a recorded termination.

Once a UCC1 is recorded and a security interest is perfected, a secured party’s focus shifts to maintaining that perfected security interest and managing the UCC1 going forward until it either lapses or is terminated.

UCC3s are a tool which secured parties use to manage that process.

Another important conversation about UCC3s are common mistakes that are made regarding them. Use the button below to download our Free Reference Guide: Top 3 Mistakes on UCC3 Change Statement .

8 thoughts on “ 5 Types of UCC3 Change Statements ”

• Pingback: UCC3 vs UCC1 Financing Statement: What’s the Difference?
• Pingback: 6 Common Risk Management Solutions in 2022 - Blogger, Interrupted
• Pingback: How To Get a Personal Loan Without Collateral - Daayri
• Pingback: UCC 3 Filing: How Does It Work?
• Pingback: A Quick Guide to Understanding UCC1 Statements - Courtney Cole Writes
• Pingback: How to Improve Your Risk Management Process - Florida Independent
• Pingback: Understanding the Security Interest Uses and Benefits - Incredible Magazines
• Pingback: ▷ ¿Qué son las presentaciones UCC? Todo lo que vale la pena saber

Leave a Reply Cancel reply

You must be logged in to post a comment.

NEW RELEASE: NCS Credit Lien Index Q1 2024

• How We Serve Overview
• Collections
• Notice & Lien
• Additional Resources
• Who We Serve Overview
• Manufacturing
• Construction
• Food Distributors
• Learning Center
• About Overview
• Case Studies

What Is a UCC-3 Filing and Why Should You File One?

Have you filed a UCC-1 to secure your interest in certain collateral? Well, if you have and you need to continue, amend, assign, or terminate your UCC filing, you will file a UCC-3. You may have already guessed, but today’s post is all about the UCC-3, including its magical powers. OK, it may not be magical per se, but it is certainly powerful and shouldn’t be ignored.

UCC-1, UCC-3, UCC-5, UCC-11

It may seem like an odd numbering system, but each form is important in its own right. A UCC-1 is the initial Financing Statement and is filed to provide notice to other creditors of your security interest. Typically, when we talk about perfecting your security interest or filing a UCC, we are usually referring to a UCC-1 or your initial filing.

Let’s skip the UCC-3 for now and jump ahead to the UCC-5 and the UCC-11. A UCC-5 is an information statement you file when you believe an existing record is inaccurate or was wrongfully filed. In compliance with Article §9-518 , this statement should include reference to the original filing (the filing with the alleged errors). It should indicate it is an information statement and it should identify what you believe to be inaccurate in the original filing. It’s important to note, this filing does not amend any information – you will need to file the UCC-3 if you need to amend info.

The UCC-11 is an information request to determine whether there are other secured parties, whether specific collateral is already secured by a UCC, and to determine a creditor’s priority.

Bouncing back to the UCC-3.

A UCC-3 Wears Many Hats

It’s true, a UCC-3 is used to continue your existing filing, amend your existing filing, terminate your existing filing, or assign your interest to another secured party.

Continuation

A UCC is effective for 5 years. If you need to extend the filing, you will file a UCC-3 Continuation within 6 months before the expiration date of the existing filing. Once the continuation has been filed, your UCC is effective for another 5 years. If you don’t file your continuation timely, your UCC will become ineffective.

How often should you continue a filing? It depends on what you are providing as the creditor. If you are a lender, and your customer’s loan period is longer than 5 years, you would need to file continuations every 5 years until the loan is paid off/closed, to maintain your security. If you are a distributor of goods, and your customer operates on a revolving line of credit with you, you should file a continuation every 5 years as your relationship continues.

I’m going to repeat what I just said moments ago: if you do not file a continuation timely, your existing UCC will become ineffective. And, as we’ve discussed on our blog before, you can’t revive your security interest; you will lose your place in line.

Ah, UCC Amendments, let me count the ways! Why would you need to amend your UCC? The most common reasons to amend a filing include a change in your customer’s name or address, a change in your company’s name or address, or a change in the collateral.

The most common, and arguably most critical, reason to amend your filing is if your customer’s name or address changes. We talk about this a lot, because not only is it vital to your security interest, it’s also one that consistently stymies creditors . Article §9-507(c) clearly states you have a 4-month window to amend your filing for a debtor name change to maintain your priority. If you fail to timely amend your filing, your filing will be considered seriously misleading, and your security interest will be unperfected. Remember, names matter in UCCs, after all, a search by name is how parties identify whether a security interest already exists on certain collateral.

I mentioned you may want to amend a filing if your company’s name or address changes, and while this is not dictated by Article 9, it is a best practice. I recommend amending the filing to alleviate delays or missed notifications about a debtor’s bankruptcy. For example, let’s say your customer files for bankruptcy. The bankruptcy trustee will go through public records (i.e., UCC filings) to ensure notifications of the bankruptcy – including the mega important bar date info – are mailed to all parties. If your address is wrong and the mail is either delayed or returned, you could miss the bar date. Yes, you could likely argue you missed the bar date because you didn’t receive timely notification, but the court may say “Hey, not my problem, you should have maintained the public record.” Is it worth the hassle?

If there is a change in the collateral, you will need to amend your filing. Other creditors are relying on the information you provide to determine whether an interest already exists on certain collateral. If your Financing Statement doesn’t correctly identify the collateral, other creditors can assume there is collateral available for them to use as security – keep it current, don’t let that happen.

If you need to assign or transfer all or some of your rights to the collateral to another secured party, you will file an Assignment.

9-514 Assignment of Powers of Secured Party of Record

(b) [Assignment of filed financing statement.]

Except as otherwise provided in subsection (c), a secured party of record may assign of record all or part of its power to authorize an amendment to a financing statement by filing in the filing office an amendment of the financing statement which:

(1) identifies, by its file number, the initial financing statement to which it relates;

(2) provides the name of the assignor; and

(3) provides the name and mailing address of the assignee.

Assignments occur frequently with banks, as one bank transfers its security to another bank.

Termination

Seems fitting to end today’s post with Terminations. The filing of a termination ceases the effectiveness of the original UCC. Typically, terminations are filed at the end of the relationship when monies have been paid and/or collateral returned. As an example, your bank filed a UCC when you signed for your car loan; once your car loan is paid off, the bank terminates their UCC, which frees up the collateral (i.e., your car).

Use caution when terminating filings because you can’t un-terminate them. If you need a billion dollar warning, check out How JP Morgan Chase Bank’s Billion Dollar Mistake Can Make You a Better Credit Manager .

Share this article with a colleague or print it for future reading

What’s the latest.

Sign up for our newsletter to stay up to date about credit services.

Browse more topics

• Credit Risk Management
• In Other Commercial Credit News
• Legislative Updates & News Alerts
• Mechanic's Liens & Bond Claims
• Preliminary Notices & Construction Credit
• UCC Financing Statements

Most Recent Resources

No lien rights for rental equipment companies in pennsylvania, primary types of lien waivers.

This infographic reviews the fundamentals of conditional, unconditional, partial, and final lien waivers. Ready to learn more about the primary types of lien waivers and which waiver could provide you with the best leverage?

The Importance of Gathering Job Information

Official Site of The State of New Jersey

• FAQs Frequently Asked Questions

The State of NJ site may contain optional links, information, services and/or content from other websites operated by third parties that are provided as a convenience, such as Google™ Translate. Google™ Translate is an online service for which the user pays nothing to obtain a purported language translation. The user is on notice that neither the State of NJ site nor its operators review any of the services, information and/or content from anything that may be linked to the State of NJ site for any reason. - Read Full Disclaimer

• Search close

Division of Revenue and Enterprise Services

Covid-19 related closures, file ucc financing statements.

Special Announcement: Uniform Commercial Code (UCC) eMandate

The Uniform Commercial Code (UCC) financing statements record and protect a secured party's interest in the collateral offered by a debtor for a loan. The UCC system gives public notice of the debtor-secured party relationship and the collateral involved.

To record this relationship, you will file a UCC Financing Statement (Form UCC-1). If the conditions change, you may amend the initial filing statement by submitting Form UCC-3. This document will reflect the current relationship including continuation of the maturity date, amendment of the conditions or information in the original filing, termination of the obligation, assignment to another, or partial release of the collateral listed. Filing services are provided for a fee.

Access UCC Service

Online Filing Service

Our system contains all of the required and optional fields needed to file UCC-1’s and UCC-3’s. With each online filing you will receive electronic confirmation that you have filed, along with a downloadable version of the filed form in the national standard format (as defined by the International Association of Corporate Administrators – IACA). Examples of the forms may be obtained from the IACA homepage or at a local legal stationery store.

The online system contains the primary data elements and enforces the business filing rules set forth in the State of New Jersey’s Administrative Code (NJAC). The system also interfaces with and imports images into the image storage facility required by the NJAC. ( N.J.A.C. 17:33 et seq. ).

• Comment & Analysis

Mick Clifford: Question marks over Chinese students' claims of 'racism' at UCC

Some students from China have complained to UCC after failing post-graduate exams. Among their complaints, including one about the Taiwanese flag, they claim not being able to avail of 'second chance' oral exams was discriminatory. Picture: Dan Linehan

At a time when racism is on the increase in this country, a bizarre allegation has emerged from University College Cork .

A group of Chinese students, who failed a post-graduate exam in the university’s business school, are claiming their failure is attributable to racism and discrimination .

That, in itself, would be highly controversial at a time when third-level institutions rely heavily on income from foreign students.

What provides the bizarre turn is a body of evidence that suggests the racism card is being played to mask the real reason for a high failure rate in a particular subject.

The result is that a lecturer has been accused of racism and had their name blackened.

No allegation exists that this or any lecturer addressed or communicated with any student in any manner that might give rise to racism.

The only issue that arose was the use, in a classroom, of the former Chinese flag — currently the flag of Taiwan — rather than what is now the national flag of China.

According to sources, this was done in a historical context (China officially changed its flag in 1971).

“To call it racist in any way is ludicrous,” one source says. “And it is very damaging to that lecturer.”

Apart from the “racism” issue, there is also an allegation of discrimination in the exam in question. Emails making allegations against the lecturer — for which there is no evidence — were circulated in UCC.

An inquiry is now underway to examine how exactly the lecturer was treated by the university authorities in dealing with the matter.

Issue arose in UCC business school 

The issue arose in one of the Masters classes in UCC’s business school. The class has more than 40 Chinese students, making up over a third of the class.

Income from foreign students is now a staple of university and college budgets in Ireland.

The failure of successive governments to properly address the whole area of third-level funding has left many institutions effectively fending for themselves in this manner.

Huge emphasis has been placed on attracting foreign students, who can pay up to €20,000 a year.

UCC, and particularly its business school, is no different from other Irish universities in assiduously courting this market.

Most of the students failed the written exam

In the only written exam on this masters course, conducted under full exam conditions, most of the Chinese students failed.

Other elements of the course were conducted on projects and group work.

The written exam results caused consternation among the Chinese students.

They returned to China mainly, it appears, because none of them got a placement in industry, a routine outcome for most students.

One of the big advantages for foreign students who come to Ireland is the offer of a two-year stay to work upon completing their studies.

From China, the students lodged a complaint about the high failure rate among their contingent.

Twenty-three students signed a letter sent to the university president and various senior “college managers”.

'Second chance' oral exam   

They claimed that, in other years, the resits didn’t include a written element, but there is dispute over the details of this claim.

The second ground of the complaint was that the college had decided that any student who didn’t attain the 40% pass mark in the written exam, but did achieve over 25%, could have a “second chance” through sitting oral exams.

The students claimed this was discriminatory to those who didn’t get 25% on the paper.

“Students who scored below 25 were not offered the opportunity to take an oral exam at all, as well as additional support,” the students wrote.

“What are the criteria for grading such a subjective group of people or even being treated differently based on the merit of their performance?”

They suggest that all those who don’t get the 40% pass mark should be treated equally, rather than giving an oral option to those who got at least 25%.

Difficulty of the exam for non-native English-speakers 

The third ground was ‘Difficulty of the Course Exam’.

“Most non-native English-speaking students did not pass the exam,” the students wrote. “We kindly request that the school assess the reasonableness of the exam’s difficulty level. Otherwise, the exam results were not published for the entire class.

“We need to ascertain the percentage of non-native English-speaking students who failed the exam.”

The Irish Examiner understands that the “non-native” cohort is largely the Chinese students themselves.

The fourth ground of complaint was that the coursework “lacked academic rigour”. The only issue referenced was that of the flag, which was “incorrectly displayed” and was “disrespectful to China”.

Foreign students pay UCC up to €20k per year

Within UCC, there is sympathy for the students.

Culturally, the failure of an exam is regarded in some Asian countries as a source of shame. There is also the money involved.

Students pay up to €20,000 for various courses per year. There would also be travel and accommodation costs. For some Chinese families, this could involve a huge sacrifice.

English language proficiency 

The issue, however, appears to be that the students may not have been properly tested as to the standard of their English before being accepted for the course.

That reflects, sources say, the policy to bring in as many foreign students as possible for the financial benefit they bring to the college.

A spokesperson for UCC said the college could not comment on any complaints from staff or students due to the requirement of confidentiality.

The spokesperson also said that UCC upholds “robust academic standards”.

The college did not answer directly a question as to whether this proficiency in the English language was a factor in the whole issue that has arisen in relation to the high failure rate among Chinese students.

The spokesperson did say that international students are “only accepted at UCC if they have been awarded the required scores in international standardised tests of English language proficiency”.

Questions remain unanswered

Yet questions remain. If proficiency in English was not an issue, why did so many Chinese students fail?

That, in turn, gives rise to whether the college is robust enough in testing the proficiency in the English skills of foreign students at a time when it desperately requires the financial boon that comes from such students attending the college.

The lecturer who was accused of racism, and that lecturer’s colleagues, deserve full answers to these questions.

So also do the Chinese students who failed in such high numbers.

Other students, who may question whether the course is operating at maximum efficiency as a result of these matters, also deserve to be fully briefed on what exactly is going on.

CORK BUSINESS

A collection of the latest business articles and business analysis from Cork.

more cork - news articles

More in this section

S Terry Prone: How 'Operation Transformation' became unacceptable

Revoiced newsletter.

Sign up to the best reads of the week from irishexaminer.com selected just for you.

Please click  here for our privacy statement.

Suzanne Harrington

Keep up with the stories of the day with our lunchtime news wrap.

The Mick Clifford Podcast

Sunday, May 19, 2024 - 10:00 PM

Sunday, May 19, 2024 - 3:00 PM

Family Notices

© Examiner Echo Group Limited