A Guide for Business Owners (Part 6): The Significance of Accurate Debtor Names in UCC Filings
A Guide for Business Owners (Part 6): The Significance of Accurate Debtor Names in UCC Filings
June 28, 2023

By: Katelyn J. Dougherty, Esq.

As a legal professional with expertise in commercial law, I recognize the vital importance of UCC filings in safeguarding the interests of business owners. Among the often neglected yet crucial elements of this procedure is ensuring the precise accuracy of the debtor’s name on a UCC filing. In this blog post, I aim to share insight into the significance of ensuring the accuracy of debtor names in UCC filings and ways to try and steer clear of some potential filing pitfalls.

Why is the Debtor’s Name Important?

When it comes to UCC filings, providing the correct debtor name is of utmost importance. A debtor name that is accurately reflected on the filing ensures that interested parties can easily locate the record and be aware of existing security interests. In contrast, even minor errors or variations in the debtor’s name can lead to a failed search and potentially jeopardize your security interests.

Navigating Filing Office Search Systems:

Filing office search systems are specifically designed to retrieve UCC records based on debtor names. These systems rely on exact matches after applying standard search logic. Therefore, any deviation, no matter how minor, in the debtor’s name can hinder the effectiveness of the filing. To avoid unintended consequences, it is crucial to exercise meticulous attention to detail when entering the debtor’s name.

Understanding UCC Section 9-503(a):

To underscore the significance of accurate debtor names, UCC Section 9-503(a) provides specific rules for different types of debtors. Not adhering to these regulations can result in significant repercussions for secured parties. In most cases, a financing statement that does not sufficiently provide the debtor’s name as required by Section 9-503(a) will be considered seriously misleading and ineffective under Section 9-506(b).

Exceptions and Search Logic:

There is an exception to the rule of strict compliance with debtor name requirements. If a search of the filing office records, using the debtor’s correct name and the jurisdiction’s standard search logic, would still reveal the record, an insufficient debtor name may not render the filing seriously misleading. However, it is important to note that search logic varies between jurisdictions and typically only disregards minor variations in punctuation, ending noise words, leading “the,” and spacing.

Considerations for Different Types of Debtors:

Business owners must be aware of the specific considerations regarding debtor names for different types of entities. For registered organizations, the debtor’s name should match the name stated in the public record, which refers to the entity’s formation documents. Care must be taken to avoid distractions from other potential name sources, such as tax returns or certificates of good standing, that may offer multiple variations.

Additionally, the growing prevalence of series entities introduces further challenges in determining the correct debtor name. Series entities are unique in that they have their own members, assets, and liabilities while remaining connected to the parent entity. Understanding the applicable state laws governing series entities is essential to properly identify and list the correct debtor name on the financing statement.

Best Practices for Accuracy:

Strict compliance with UCC Article 9 debtor name rules is crucial for business owners seeking to protect their security interests. When filing UCC records, it is imperative to provide the exact debtor name as stated on the designated source document, ensuring precise spelling, spacing, and punctuation. In cases where uncertainty arises regarding Section 9-503(a) requirements for the correct name, including one or more name variations can help ensure that the financing statement covers all possibilities.

In summary, as a business owner, understanding the importance of accurate debtor names in UCC filings is vital to safeguard your security interests. By diligently following the guidelines provided in UCC Article 9 and taking into account the considerations for different types of debtors, you can ensure the effectiveness and enforceability of your filings.

If you have specific concerns or require assistance with debtor names or UCC filings, please get in touch with an experienced attorney. They can offer personalized advice tailored to your specific circumstances.

Don’t have a business attorney? Get in touch with our team by emailing Info@harbourbusinesslaw.com.

This Blog was written by Founding Attorney, Katelyn Dougherty.

DISCLAIMER: This blog is for educational purposes only and does not offer nor substitute legal advice. This blog does not establish an attorney-client relationship and is not for advertising or solicitation purposes. Any of the content contained herein shall not be used to make any decision without first consulting an attorney. The hiring of an attorney is an important decision not to be based on advertisements or blogs. Harbour Business Law expressly disclaims any and all liability in regard to any actions, or lack thereof, based on any contents of this blog.

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