advertising section technology
costs, but will provide vital protections
against risks of lost positions.
of every lien to help factoring firms and
others streamline workflows, reduce
costs and avoid similar outcomes. In
addition to a web-based platform to file
and search for any UCC in any jurisdiction, clients can leverage a portfolio
management tool for tracking and creating subsequent filings including continuations, terminations and amendments.
In addition, we offer corporate name
verification (at no charge) to ensure
searching and filing is done under the
debtor’s proper name, along with scheduled, automated searches and ongoing
monitoring for tax, judgment or other
liens that can supersede a factor’s position. In fact, we track our client’s debtor
names each day, monitor for new filings
by other parties and immediately alert
our clients when name changes, mergers, dissolutions, loss of good standing
and more occur.
By Michelle Rowley,
Director of Marketing
CT Lien Solutions
Let’s face it: factoring firms live and
die by their lien positions. All it takes
is one filing error, incomplete search
or debtor name change, and a factor
can find itself in a perilous situation.
It’s vital for factors to protect their
financial interests with thorough due
diligence -- both at the onset of a debtor
relationship and during its tenure. For
example, at any point there could be
filing error, a subsequent delinquency or
bankruptcy, or undiscovered superseding lien position.
To ensure and protect their positions
on receivables, factors should partner
with industry service experts that offer
expertise and solutions for UCC filing,
searching, debtor and lien monitoring and more. These types of support
mechanisms will not only improve a
factoring firm’s workflow and reduce
“The Real World”: When Mistakes in Financ-
ing Statements Leave Lenders at a Loss
Two recent court cases illustrate the significance, complexity and risks involved.
◗ The first involves a discrepancy
between a firm’s legal name and how
it was misrepresented by a lender on
a UCC- 1 financing statement. Several
years ago, a lender filed a UCC lien
after entering a funding relationship
with an agricultural company. Unfortunately, on the UCC- 1 it mistakenly
included an ampersand symbol “&”
instead of using the word “and” when
indicating the debtor’s name.
The debtor later filed for Chapter
7. A trustee for the firm claimed the
lender’s lien was invalid because
on the financing statement it failed
to use the firm’s exact legal name.
Although the difference between “&”
and “and” appears minor, the courts
sided with the company and the UCC-
1 became insufficient to perfect the
lender’s security interest.
Had the lender partnered with a service firm for debtor name verification,
it would have confirmed the correct
debtor name when conducting due-diligence searches, well before even
filing the UCC. 1
◗ A leasing company listed the name of
a debtor incorrectly on a UCC- 1 after
it leased the company equipment.
When the company filed for Chapter
7 bankruptcy, the debtor argued that
the misrepresentation on the UCC- 1
meant it could avoid the leasing
company’s security interest. Although the UCC- 1 was filed correctly,
it was rendered seriously misleading
due to the error and was therefore
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CT Lien Solutions provides value - and
safeguards - throughout the lifecycle