It recently popped into the news that the lender for the bankrupt law firm Heller Ehrman terminated its UCC filing: Banks May Lose $51 million in Heller Dispute.
On August 3, 2007, a UCC Financing Amendment was filed with the termination box checked. (See a copy of the UCC Amendment.) The lender filed a correction statement in an attempt to fix this problem. Given that the correction was filed in the 90 days prior to the bankruptcy filing, it would be treated as a “preference” under the bankruptcy code. That means instead of being a secured creditor, first in line for its share of the assets, the lender is unsecured and in with a large group seeking a proportionate share of what is left.
If you are a secured creditor (or at least you think you are) you need a program in place to periodically check the status of your filings. You also need an internal process to double-check filings before they are delivered.