Is a general description of collateral in the new financing statement appropriate?
“Supergeneric” terms like “all personal property” are now allowed in a financing statement but are not sufficient for a security agreement. If a term such as “all personal property” is used, good practice would be to add “including but not limited to” and a list of specific items that can be identified, Miller recommends. 5. Is the debtor a registered organization? Financing statements must contain the correct name of the debtor. If the debtor is a registered organization, lawyers need to get the correct name from current, certified copies of articles of incorporation or other organizational documents. Counsel need to perform a lien search in all names the debtor goes by or has used in the past. Miller represented a party in a transaction in which the owner of a local fast food restaurant had previously obtained financing in his individual name, the name of the owner’s limited liability company, and the franchise name. “Sophisticated lenders may require borrowers to set up LLCs to make
Related Questions
- Issue Description: What is the appropriate capital structure (i.e., the relative proportions of long-term debt, short-term debt, preferred equity, and common equity) to use in calculating MGEs cost of service?
- Who determines the types of collateral included on a financing statement?
- Why might debt financing be more appropriate?
