By: Scott B. Riddle, Esq.
Tidwell, Ch. 7 Trustee of Amron Technologies, Inc., v. Legrand, et al., Adv. No. 06-5081, 2007 Bankr. LEXIS 1028 (Bankr. M.D. Ga. March 22, 2007) (Walker). Several parties loaned money to the debtor, memorialized by a single promissory note. Each defendant contributed a different amount to the amount loaned via the note. A UCC financing statement was also filed, but it only identified one of the defendants as the secured party.
The trustee filed an adversary proceeding to determine the validity and extent of the lien. The Court first held that only the person named on the UCC Financing Statement had a valid perfected security interest in the debtor’s assets, as the identity of the secured party was a basic formal requirement of UCC §9-506(a). The court dismissed the other defendants’ argument that the one defendant identified as the secured party was acting in a representative capacity for all of them, as no agency agreement existed.
The Court then held that the one defendant identified in the UCC Statement as a secured party was secured for the entire amount of the loan, even though she only contributed $10,000 of the $50,000 loan. Nothing in the Note or Security agreement limited the security interest to the amount contributed by the named secured party.