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ARTICLE · 18 OCTOBER 2019

Seventh Circuit Issues Surprising Ruling On Sufficiency Of UCC Collateral Description

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In a surprising development, on September 11, 2019 the Seventh Circuit Court of Appeals issued a ruling on appeal reversing a lower bankruptcy court decision and found that a UCC financing statement ...

United StatesFinance and Banking
Barbara Goodstein
Barbara Goodstein
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In a surprising development, on September 11, 2019 the Seventh Circuit Court of Appeals issued a ruling on appeal reversing a lower bankruptcy court decision and found that a UCC financing statement that contained no collateral information whatsoever, but simply cross-referenced a security agreement, sufficiently "indicated" the collateral for purposes of UCC Article 9. In so doing, it put itself directly at odds with a January 2019 decision by the U.S. Court of Appeals for the First Circuit (In re Financial Oversight & Management Board)" in connection with the insolvency proceeding for Puerto Rico.

The Seventh Circuit case, In re I80 Equipment, LLC (2019 WL 4296751), was a matter of first impression in Illinois. In that case, the debtor, I80 Equipment, LLC, had granted an "all assets" lien to First Midwest Bank to secure repayment of a loan. The security agreement covered 26 different categories of collateral. But the UCC financing statement simply said

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