Pub. 2 2011 Issue 1

spring 2011 11 I n In re EDM Corporation , 431 B.R. 459 (B.A.P. 8th Cir. 2010), the Court addressed a priority dispute among three creditors relating to an ambulance owned by EDM Corporation (“EDM”). On June 10, 2003, Hastings State Bank (“Hastings’”) filed a financing state- ment with the Nebraska Secretary of State identifying the debtor as “EDM Corporation d/b/a EDM Equipment.” EDM’s official name on file with the Nebraska Secretary of State was EDM Eighth Circuit Reaffirms the Importance of Accurately Listing a Debtor’s Name when Filing UCC Financing Statements By Julie Chincheck and Kristin Shaffer, Bowles Rice McDavid Graff & Love LLP In a recent decision, the Bankruptcy Appellate Panel for the Eighth Circuit Court of Appeals (the “Court”) held that a UCC financing statement which identified the debtor using both the debtor’s official name and a trade name failed to properly identify the debtor and that the creditor had therefore failed to properly perfect its lien on the collateral. ing statement first. There was also no dispute that lien searches using standard logic were requested by both TierOne and Huntington on “EDM Corporation” following the filing of Hastings’ financ- ing statement and that the lien searches failed to reveal Hastings’ prior lien. Like West Virginia and the majority of other states, the State of Nebraska has adopted the Uniform Commercial Code and the Model Administrative Rules for UCC Article 9. Under the UCC, a creditor wishing to perfect a lien must file a financing statement with the ap- propriate governmental authority. The financing statement is typically a stan- dardized filing naming the debtor, the creditor, and describing the collateral. Once filed, a governmental employee enters the data on the financing state- ment into a computerized indexing system. This system allows a potential lender to determine whether there are prior existing liens on the borrower’s property by running a lien search. Un- der the Model Administrative Rules for UCC Article 9, organization names are entered into the filing system exactly as set forth in the financing statement. Therefore, because Hastings’ financ- ing statement added the words “d/b/a EDM Equipment” to EDM’s name, the search for “EDM Corporation” did not reveal Hastings’ prior lien. After deciding that Hastings’ financing statement failed to correctly identify EDM, the Court considered whether the financing statement was seriously misleading. Section 9-506 provides Corporation. On January 26, 2006, TierOne Bank (“TierOne”) filed a financing statement with the Nebraska Secretary of State identifying the debtor as “EDM Corporation.” On December 13, 2007, Huntington National Bank (“Huntington”) filed a third financing statement with the Nebraska Secretary of State. Huntington also identified the debtor as “EDM Corporation” on its financing statement. There was no dispute that Hastings filed its financ-