4. Priority Flashcards
Cast of Characters
What are the six groups of creditors, in order of priority?
BPL NAG
- Buyer in ordinary course
- Perfect attached creditor
- Lien creditor
- Non-ordinary course buyer
- Attached unperfected creditor
- General unsecured creditor
Cast of Characters
Who is a buyer in ordinary course?
Someone who purchases the collateral from merchant’s inventory
Cast of Characters
Who is a perfect attached creditor?
Article 9 CR who perfects
Cast of Characters
Who is a perfect attached creditor?
Article 9 CR who perfects
Cast of Characters
Who is a lien creditor?
An unsecured CR who goes to court to enforce
Cast of Characters
Who is a non-ordinary course buyer?
Someone who purchases the collateral from a non-merchant
Cast of Characters
Who is an attached unperfected creditor?
Article 9 CR with an unenforceable interest, i.e. not filed or improperly filed
Cast of Characters
Who is a general unsecured creditor?
Lender who takes no collateral
PAC v the world
Who beats a PAC in priority?
- Earlier PACs
- BIOCs
- PMSI holders in X where PAC is an AACF and X is part of DR’s future inventory
PAC v the world
What is the general for priority?
First in time, first in right
PAC v the world
What is early filing, and how does it affect priority?
If a lender files during negotiations and the security interest later attaches, priority relates back to the date of filing
PAC AACF v PMSI
How is the contest set up?
- AACF lends money to A and gets security is A’s future business equipment/inventory and perfects
- A then acquires X from PMSI
- AACF and PMSI holder have a competing interest in X
PAC AACF v PMSI
When the collateral is equipment, what must PMSI-holder do to prevail over earlier AACF?
File properly within 20 days of A taking possession of X
PAC AACF v PMSI
When the collateral is inventory, what must PMSI-holder do to prevail over earlier AACF? How come?
File properly and notify AACF before A takes possession
To prevent AACF from being tricked into extending more credit on the basis of the new inventory which could ordinarily be sold