C-Corps and UCC-1s

[Todd Bayer]

Does anyone in these forums truly understand the benefits of having C-Corps and utilizing the UCC-1 form? I have just been told some very intriguing information and I would love to discuss it with someone further. PM me or respond to this post. Thanks.

[Clint Coons]

Todd,

I am not sure if you heard or read something about UCC-1 filing and their supposed benefits to delay creditors but I can tell you to tread carefully. A UCC-1 form, also known as a Financial Statement, is used in the commercial context to secure a lender's interest in a borrower's personal property as collateral for an extension of credit. (This also applies to securing a land trust interest or an LLC interest but not the underlying assets of the entity)

A UCC-1 form is typically filed with the state's Secretary of State Office and serves to put others on notice that the lender has a secured interest in the items listed on the form.

A UCC covers "Personal property" meaning non-real property used in operating a business, such as equipment, furniture, and inventory. On a few occasions a client will mistakenly believe that a UCC filing will cover real estate because a box on their form has a place to enter a "real estate description". This description is typically used for timber liens or for general fixture filings that cover an entire parcel of real estate.

Basically, the UCC-1 form serves as a public notice of a lender's interest in the assets for a business. Don't fall into any pitchman's trap about some obscure case or Public law argument lest you end up like Wesely Snipes. Strawman type transaction do not hold up in court and can only lead to problems down the road.