Priorities

Question 1

General Order of Priorities

Answer 1

(1) Buyer in the Ordinary Course; (2) Perfected Attached Creditor; (3) Lien Creditor; (4) Non-Ordinary Course Buyer; (5) Attached Unperfected Creditor; (6) General Unsecured Creditor

Question 2

Priority Between Unperfected Secured Parties

Answer 2

Unperfected attached creditors (5) follow a first in time, first in right model; the first to attach has priority [but know that any of these dudes can easily get priority by perfecting]

Question 3

Priority Between Unperfected and Perfected Secured Parties

Answer 3

A perfected security interest prevails over an unperfected security interest, even if the perfected secured party takes her security interest w/knowledge of the earlier unperfected security interest

Question 4

Priority Between Perfected Secured Parties (PACs)

Answer 4

General Rule: First to either file or perfect has priority

Still subordinate to PMSI-holders (they get superpriority) and buyers in the ordinary course

Question 5

After-Acquired Collateral Financier (AACF)

Answer 5

A secured creditor who takes as collateral a security interest “in all of Debtor’s [item]” whether now held or hereafter acquired”

Question 6

PMSI-holder v. AACF: Equipment as Collateral

Answer 6

PMSI-holder can gain first priority by filing properly within 20 days after the debtor takes possession of the collateral the PMSI financed

Question 7

PMSI-holder v. AACF: Inventory as Collateral

Answer 7

PMSI-holder can gain first priority by filing properly before the debtor takes possession of the collateral and notifying the AACF before the debtor takes possession of the collateral

Question 8

PMSI v. PMSI

Answer 8

A secured party who has a PMSI in collateral as a seller has priority over a secured party who has a PMSI in the same collateral as a lender; otherwise, the first secured party to file or perfect prevails

Question 9

Filing Collateral

Answer 9

Collateral in which a secured party would normally achieve priorty by filing a financing statement (e.g., goods ,accounts, etc.)

Question 10

Non-filing Collateral

Answer 10

Collateral in which a secured party would normally achieve priority by possession or control rather than filing (e.g., cash, chattel paper, nonconsumer deposit accounts, investment property)

Question 11

Priority in Proceeds

Answer 11

First to file or perfect

Question 12

Buyer in the Ordinary Course (BIOC)

Answer 12

Generally reigns supreme; when you buy shit from a store, people who took security interests over the inventory don’t come to seize it as their collateral; we want to promote commerce and honor buyers’ reasonable expectations

Question 13

Unperfected Secured Party v. Lien Creditor

Answer 13

Lien Creditor prevails over holder of a security interest in collateral if the lien creditor becomes such before the security interest is perfected (still subordinate to PMSI (and i think to the perfected security interest?))