UCC Priority
When creditors target the same receivables or accounts, UCC concepts stop being abstract. Understanding priority can prevent irreversible mistakes.
Attachment and Perfection
Priority analysis begins with threshold questions:
- whether a security interest has attached,
- whether it has been properly perfected, and
- what collateral is actually covered.
Financing arrangements that disclaim being loans may still rely on security interests, control agreements, or contractual access to accounts that implicate Article 9.
Control Versus Filing
In disputes involving deposit accounts or receivables, control often matters more than filing.
Control mechanisms can include:
- deposit account control agreements,
- direct debiting authority,
- lockbox arrangements, or
- contractual rights that function as control in practice.
These mechanisms may affect priority even where traditional filing has occurred.
Competing Priority Regimes
Article 9 does not operate in isolation.
Priority conflicts often involve:
- statutory trusts,
- tax liens,
- PMSIs,
- judgment liens, and
- equitable claims.
Understanding which regime governs a particular asset class is critical to resolving enforcement disputes.
Timing and Tracing
Priority can shift based on timing and asset transformation.
Common issues include:
- proceeds versus original collateral,
- commingling of funds,
- tracing limitations, and
- after-acquired property clauses.
These issues frequently determine whether enforcement actions succeed or fail.
Misalignment With Contract Expectations
A recurring source of conflict is the assumption that contractual sequencing controls priority.
In practice, statutory and UCC priority rules override private ordering when they conflict.
Disputes escalate when enforcement actions ignore these constraints.
Purpose of This Section
This section provides a structural overview of how Article 9 priority operates in contested financing disputes.
Later sections address how statutory trust obligations intersect with these priority frameworks.