Question
Under Article 9 of the Uniform Commercial Code, what is the order of priority for the following security interests in a bulldozer? I. Security interest
Under Article 9 of the Uniform Commercial Code, what is the order of priority for the following security interests in a bulldozer?
I. Security interest perfected by filing on February 15, 2022.
II. Security interest which attached on February 1, 2022 and is not perfected.
III. Purchase money security interest security interest which attached on February 11, 2022 and perfected by filing on February 20, 2022.
A. | III , II , I. | |
B. | II , I , III . | |
C. | III , I , II. | |
D. | I, III , II. |
Citizen's Bank of Edina has a properly perfected security interest in "existing inventory and all inventory hereafter acquired" of the Western Auto Hardware store in Novinger, MO. The ACME Wholesale Hardware Company sells to Western Auto 50 hammers, 35 Phillips screwdrivers, 10 industrial mops, 40 window washing kits, 100 drill bits, 1,000 nails and 100 cordless drills for $10,000 and takes back a security interest in the products sold. 15 days after the products are delivered to Western Auto, ACME files a financing statement with the Missouri Secretary of State and sends notice to Western Auto of its security interest in the inventory. 2 months later Western Auto files for Chapter 7 bankruptcy. Who will have priority to the products sold by ACME to Western Auto and why?
A. | The bankruptcy trustee because a trustee's interest in the debtor's property has priority over competing perfected security interests. | |
B. | Citizen's Bank will win because it had a prior perfected security interest and ACME failed to perfect and provide them notice before delivery of the new inventory to Western Auto. | |
C. | The bankruptcy trustee because all security interests are extinguished when creditors compete over priority of security agreements in collateral. | |
D. | ACME because it perfected its security interest and provided notice to Citizen's Bank within 20 days of delivery of the products to Western Auto. |
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