Under Revised Article 9, a debtor that is a legal entity is “located” in the jurisdiction of its incorporation or organization.
In In re Glob. One Media, Inc., 667 B.R. 878 (B.A.P. 9th Cir. 2025), the Bankruptcy Appellate Panel for the Ninth Circuit rejected a challenge to the well-settled principle of Uniform Commercial Code (UCC) Article 9 law, which provides that a secured creditor must file a UCC-1 financing statement in the debtor’s jurisdiction of incorporation or organization to perfect a security interest in a debtor’s personal property.
Background
On February 2, 2024, Global One Media Inc., a Delaware corporation, filed a voluntary bankruptcy petition under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the District of Nevada. In its petition, the debtor listed Newtek Small Business Finance LLC as a secured creditor with security interests in both real and personal property. Newtek later filed a proof of claim for $2,876,427.04, claiming $770,505 as a secured claim. Of its total secured claim, Newtek claimed $430,505 was secured by personal property of Global One located in New Mexico and Nevada. In support of its claim, Newtek presented copies of the UCC-1 financing statements it had filed with the Secretary of State Offices in Nevada and New Mexico on July 2, 2022, and October 7, 2022, respectively, to perfect its security interests in certain personal property of the debtor. The Chapter 11 trustee challenged Newtek’s claim, arguing that Nevada and New Mexico were not the proper states in which to file UCC financing statements because Newtek was incorporated in Delaware. As a result, the trustee argued that Newtek’s security interests were not properly perfected and it did not have a secured claim against Global One. The trustee asserted that, because the debtor was organized in Delaware and therefore “located” in Delaware, Delaware’s version of the UCC required that Newtek file the UCC-1 financing statements with the Delaware Secretary of State to perfect Newtek’s security interests in the debtor’s personal property, regardless of where that property was located. Since Newtek had failed to do so, the trustee therefore requested that the bankruptcy court relegate Newtek’s claim for $430,505 to an unsecured claim.
In opposition, Newtek cited Section 9-301(3)(C) of Delaware’s version of the UCC, which provides as follows:
(3) [W]hile negotiable tangible documents, goods, instruments, or tangible money is located in a jurisdiction, the local law of that jurisdiction governs:
…
(C) the effect of perfection or nonperfection and the priority of a nonpossessory security interest in the collateral.
Newtek argued that this provision means that perfection of a security interest in personal property is governed by the law of the jurisdiction in which that property is located, and because Newtek had filed UCC-1 financing statements in New Mexico and Nevada where the collateral was located, it had properly perfected its interest in such collateral. The bankruptcy court agreed with Newtek and allowed its asserted secured claim of $770,505.
The Ninth Circuit’s Ruling
Upon appeal by the trustee, the Ninth Circuit Bankruptcy Appellate Panel reviewed the 2001 adoption of Revised Article 9 of the UCC by all states, including Nevada, New Mexico and Delaware, noting that the revision had “worked a fundamental change by shifting the focus for filing purposes from ‘location of the goods’ as the controlling factor to ‘location of the debtor.’” The goal of this change, according to the court, was to simplify the perfection process by requiring that UCC-1 financing statements be filed in the state in which the debtor was “located” rather than the many states in which collateral may be located. The revision therefore both eliminated the need to distinguish between “mobile” and “ordinary” goods and also reduced the number of filing offices when collateral is located in multiple jurisdictions. Under Revised Article 9, a debtor that is a legal entity is “located” in the jurisdiction of its incorporation or organization.
In furtherance of the objectives of the UCC drafters, the court held that Newtek and the bankruptcy court were incorrect, explaining that Section 9-301(3)(C) did not govern the location of filing to achieve perfection, as Newtek and the bankruptcy court were arguing, but rather the “effect of” perfection or nonperfection and any “priority” disputes between claimants over property located in those states. Moreover, the court agreed with the trustee that Section 9-301(3)(C)) governed and that, under this provision, Newtek was required to file its UCC-1 financing statements in Delaware to perfect its security interests in the debtor’s personal property. The court therefore reversed and remanded the case to the bankruptcy court to determine the unsecured portion of Newtek’s claim.
Conclusion
Although Newtek understandably advanced an interesting and creative argument in an effort to salvage its secured claim, its principal argument flew in the face of over 20 years of precedent that has consistently interpreted the 2001 revisions to UCC Article 9 to require secured parties to file UCC-1 financing statements in the jurisdiction in which its debtor is organized (for debtors that are legal entities and not individuals) to perfect a security interest in personal property collateral where doing so is permitted. With respect to this issue, the starting point of inquiry for every secured party in determining jurisdiction of filing a financing statement against a corporate debtor for nonreal property related business assets—such as accounts, equipment and inventory—is determining the jurisdiction in which the debtor is incorporated or organized. In connection with this determination, a secured party employing best practices will order and review a certified copy of the debtor’s currently legally effective charter documents. Additionally, a secured party must always evaluate whether its collateral requires it to make filings in additional jurisdictions or locations, and whether other forms of perfection, such as possession or control, also apply to the assets serving as the secured party’s collateral.
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