Improper Punctuation Prevents Perfection

On behalf of Macdonald Fernandez LLP on Tuesday, July 9, 2013.

In In re C. W. Mining Co., 2013 WL 888677 (D. Utah 2013), the district court of Utah held that a UCC-1 Financing Statement that omitted periods after initials in the debtor's name was unperfected and could be avoided under Bankruptcy Code Section 544. Specifically, the recorded document identified the debtor as "CW Mining Company," as opposed to its registered name, "C. W. Mining Company," and the error prevented the company from appearing in a title search using Utah's standard search logic. The fact that a reasonably diligent researcher might have found the lien was not relevant under UCC Article 9. The error may cost the creditor almost $3 million. The lesson: cross your t's, dot your i's, and understand your state's search logic for recorded liens against personal property.