A series of cases decided by the federal district court in
Chicago holds that a properly perfected secured creditor can waive
its right of priority in collateral in favor of a judgment lien
creditor if it fails to properly act against its collateral
following a borrower's default.
Typically a secured creditor attains perfected status and rights
of priority in property upon properly filing its financing
statement. The adage "first in time, first in
right" is the paradigm. Security agreements typically
contain language that grants the secured party rights to pursue its
collateral under Article 9 of the UCC following an event of
default. These rights of priority are critically important
following an event of default particularly if there are creditors
with competing interests in the debtor's property. If the
secured creditor enjoys the rights of priority it can not only
control the method of realizing upon its collateral (such as
through disposition by foreclosure), but
