If you submit a UCC-3, you only make one change at a time. States will most likely reject a UCC-3 that is both an amendment and a sequel. File separate forms for each change, in a logical order. If a new debtor is added, you cannot continue an agreement with them until they have been added. For a UCC-1 to have any weight in a court proceeding, it must contain the exact legal name of the debtor, the guarantees contained in the right of guarantee and the name of the guaranteed party. For the list of guarantees, the law does not require a detailed description. However, your agreement may require additional details such as disclaimer and subordination. The Court analysed the Bank`s agreement and priority using four separate theories: (i) the agreement created partial or total subordination; (ii) Caterpillar has obtained an equipment security interest in refinancing the debt on the Caterpillar aircraft; (iii) the placement of the device`s title in an ad hoc entity refuted the bank`s claim; and (iv) the “Composite Document” rule has perfected Peabody`s interest service for equipment and bank debt. The Uniform Trade Code (UCC) is a series of regulations that have been adopted to facilitate interstate trade. While the code is the same in all states, the filing requirements differ. It includes amicable agreements between the parties and does not include non-consensual declarations, such as tax pledges. While the intent of the code is to belong between states, there are differences between states. A number of them are with each state`s notification requirements.

This type of UCC-3 continues the agreement for five years after the due date. It must be filed within six months of the maturity of UCC-1. The Court first determined whether the agreement resulted in a total or partial subordination between Peabody and the Bank. Complete subordination is recognized in a minority of legal systems and (a) the interest of the subordinate party is placed under that of the other party and b) the priorities of all eligible parties, including those who are not contracting parties, are reorganized. For example.B. a party in the first priority concludes a subordination agreement with a third priority, the agreement would move the first priority holder in the third, which would place the second priority (i.e. the party part) towards the first priority position. Partial subordination, recognized by the majority of the courts, leads the parties to the subordination agreement to change their respective priority positions. The Court took the majority approach and found that the agreement exchanged Peabody`s priority position with the Bank, placed the bank first and placed Peabody behind Caterpillar. A UCC 3 subordination is a form that is used when more than one lender is interested in the same guarantees. In this case, a subordination agreement should be signed to determine the order in which the lenders will be repaid.

As a general rule, the interest of the second lender for collateral is subordinated to the first lender. Finally, the Court considered the documents underlying Peabody`s claim to the equipment and its impact on the agreement. One of the requirements for developing a securities interest under UCC (b) (3) (A) is that in addition to filing a financing return, a debtor must have certified a guarantee contract containing a description of the security. Peabody has never submitted a certified safety agreement. In response to the lack of a security agreement, the bank attempted to use the “composite document theory” to maintain Peabody`s priority claim. The composite document theory replaces other documents as evidence that a security contract has been signed by the debtor. In this case, the bank provided the financing statement and the agreement, both of which provided the security agreement as evidence that the security agreement and security interest were related to the equipment.