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Abbreviated Name Makes UCC Financing Statement Defective
In In re Bryant, (Bankr. M.D. Ga. June 7, 2021), the U.S. Bankruptcy Court for the Middle District of Georgia determined that a lender's UCC-1 financing statements were "seriously misleading" under the Georgia Commercial Code. Because the financing statements identified the individual debtor with his middle name abbreviated, the court concluded that the financing statements were defective and, therefore, that the lender's security interest had not been perfected.
'Seriously Misleading' UCC-1 Financing Statements
The Uniform Commercial Code (UCC) requires that a financing statement meet certain standards in order for the lender to effectively perfect a security interest in an individual debtor's collateral. One of these requirements is that the financing statement provide the debtor's name. The comments to the UCC indicate that the name requirement is "particularly important," because "financing statements are indexed under the name of the debtor and those who wish to find financing statements search for them under the debtor's name."
Section 9-503 of the UCC provides two alternative methods for a secured creditor to employ in order to identify its individual debtor. The first method distinguishes between: a debtor holding an unexpired driver's license issued by the state where the financing statement is filed; and a debtor who does not hold an unexpired driver's license issued by the relevant state. If the debtor has a validly issued and unexpired driver's license, the lender is constrained to provide the individual debtor's name as it appears on the driver's license; on the other hand, if the individual debtor does not hold such a license, a financing statement will be sufficient if it provides either the debtor's "individual name" or the debtor's surname or family name and first personal name.
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