In short, a PMSI is a security interest in goods securing credit extended to enable the debtor to acquire or use the goods. The priority afforded to PMSIs is an exception to the “first-to-file” rule of UCC 9-322(a), which governs the priority of most security interests. ![]() ![]() What is special about a PMSI?Ī creditor that has a PMSI has the ability to gain priority over (or to “prime”) previously perfected security interests. The lender might be surprised to learn that its perfected security interest in after-acquired property may subsequently become junior to a purchase-money security interest (PMSI) held by a seller or other party that is financing the borrower's purchase of inventory, equipment, or other assets. Upon the closing, the lender files a UCC financing statement in the appropriate jurisdiction to ensure that it has a perfected, first-priority lien in the collateral. ![]() In a typical secured credit facility, a lender makes a loan to a borrower secured by all assets of the borrower, including property acquired after the closing of the loan.
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