7th Circuit Rules On Sufficiency Of UCC Financing Statement

Secured creditors filing a UCC financing statement under Article 9 must include a description of the collateral. (UCC 9-502) UCC Article 9 adopts a “notice filing” system, under which the purpose of the filing is to provide notice of a security interest in the specified collateral. UCC Article 9 does not require a precise (e.g., serial number) description. Even so, there has been much litigation over the sufficiency of the collateral descriptions in UCC financing statements. A recent example is a 7th Circuit Court of Appeals opinion which may have stretched the concept of “notice filing.” (In re: I80 Equipment, LLC, 7th Circuit Court of Appeals, No. 18-3291, September 11, 2019)

I80 Equipment purchased and refurbished trucks for resale. In 2015, I80 Equipment obtained a commercial loan from First Midwest Bank. As part of the transaction, I80 Equipment and First Midwest executed a security agreement which granted First Midwest a security interest in substantially all