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UCC Expert’s Corner: Court Finds Financing Statements Perfected Later Unrelated Security Interests

By Paul Hodnefield, Associate General Counsel for CSC

Secured lenders may consider using a previously filed financing statement to perfect a security interest arising from a new but unrelated transaction with the debtor. The objective is to perfect the security interest for the new transaction, but gain the original financing statement’s priority. However, other creditors may challenge that priority claim, especially if the original obligation was paid in full, or never closed at the time they filed their financing statements.