The Importance of a Proper Collateral Description in a UCC Financing Statement

A trade creditor can obtain a security interest in its customer’s property to increase the likelihood of payment of the creditor’s claim. A creditor seeking a valid and perfected security interest in its customer’s personal property, with priority over future security interests in the same property, must properly identify its collateral in both (i) the security agreement executed by its customer, and, just as importantly, (ii) the financing statement that was publicly filed pursuant to the Uniform Commercial Code (the “UCC”).