Issue: Whether a UCC financing statement securing ‘all assets’ of a corporation creates a priority security interest in all assets at the time of the filing of the financing statement or in all after-acquired assets as well.
|Area of Law:||UCC & Secured Transactions|
|Keywords:||All assets; Financing statement; After-acquired assets|
|Cited Statutes:||6 Del. Code § 9-108(a); Wis. Stat. § 409.108(1); 6 Del. Code. § 9-108(c); Wis. Stat. § 409.108(3); 6 Del. Code § 9-204(a); Wis. Stat. § 409.204(1)|
Not only is an “all assets” financing statement legally defective under Delaware law, but it does not incorporate after-acquired assets unless the language of the statement so provides:
· Except as otherwise provided in subsections (c), (d), and (e), a description of personal or real property is sufficient, whether or not it is specific, if it reasonably identifies what is described. 6 Del. Code § 9-108(a); Wis. Stat. § 409.108(1).
· A description of collateral as “all the debtor’s assets” or “all the debtor’s personal property” or using words of similar import does not reasonably identify the collateral. 6 Del. Code. § 9-108(c); Wis. Stat. § 409.108(3).
· Except as otherwise provided in subsection (b), a security agreement may create or provide for a security interest in after-acquired collateral. 6 Del. Code § 9-204(a); Wis. Stat. § 409.204(1).
No Delaware cases have been located illustrating this principles, but some may be available nationwide given the conformity in the UCC among the states.