Uniform Commercial Code Question On January 1, Y-Company purchased equipment for
ID: 453805 • Letter: U
Question
Uniform Commercial Code Question
On January 1, Y-Company purchased equipment for $425,000 from Big Corporation for use in its manufacturing process. Y-Company paid for the equipment with funds borrowed from New York Bank. Y-Company gave New York Bank an authenticated security agreement covering Y-Company’s existing and after-acquired equipment. On January 10, Y-Company was petitioned involuntarily into bankruptcy under Chapter 7 of the Federal Bankruptcy Code. A bankruptcy trustee was appointed. On January 19, New York Bank duly filed a sufficient financing statement. Which of the parties will have a superior security interest in the equipment? Explain in legal terms.
Explanation / Answer
Newyork Bank hahve superior security interest in the Equipment.
- Newyork Bank paid Y Company against purchased equipment as a loan which was not cleared by Y Company.
- Newyork Bank is having authonticated security agreement which covers Y Companies existing & after acquired equipments. So new equipment is covered in this term.
- Newyork bank have all legal documents & financial transactions which proves its superior security interest in equipment.
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