Business Law

Financing Statement’s Failure to Include Debtor’s Middle Name was Strong Indication that Security Interest Unperfected in Bankruptcy

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The following is an update analyzing a recent case of interest.

A creditor’s failure to include a debtor’s middle name on its financing statements was strong indication under Georgia’s interpretation of the UCC that the liens were invalid and thus they could not be used to support a motion for relief from stay in a Chapter 12 bankruptcy case filed in the Middle District of Georgia Bankruptcy Court (the “Court”).  In re Bryant, 2021 WL 2326336 (Bankr. M.D. Ga. June 7, 2021).  To view the opinion, click here.


Debtor Darren Eugene Bryant (“the debtor”) filed a chapter 11 case in November 2017.  Regions Bank (“Regions”) asserted a claim partially secured by personal property in the chapter 11 and objected to plan confirmation.  The debtor, acting as debtor in possession, and Regions resolved the objection with a consent order which acknowledged Regions’ partially secured claim.  The plan was confirmed in August 2019, after which the case was promptly closed.  The plan achieved substantial consummation.

In October 2020, the debtor filed a chapter 12 petition.  Regions again filed a partially secured claim and then filed a motion for adequate protection or relief from the automatic stay.  Regions’ security was based on UCC-1 financing statements filed in Georgia under the name Darren E. Bryant.  The chapter 12 trustee (“the trustee”) objected to the motion, asserting that the security interest was not properly perfected under Georgia law.  Regions claimed its security was valid and the trustee’s imperfection argument was barred by res judicata (claim preclusion) and judicial estoppel.  The Court agreed with the trustee and denied the motion.


The trustee asserted that the debtor’s name on the financing statement was “seriously misleading.”  The debtor’s name on his driver’s license included his full middle name.  Per the trustee, because the full middle name was not on the UCC-l, Regions’ financing statements were not revealed by a search using the Georgia Superior Court Clerks’ Cooperative Authority’s standard search logic.  The Court analyzed Georgia law and determined that the trustee’s assertion that the standard search would not show Regions’ secured interest was correct.

Under Georgia law, a UCC-1 financing statement required to perfect a nonpurchase money security interest must include among other things the name of the debtor.  Georgia law provided that a financing statement sufficiently identified a debtor “if the debtor is an individual to whom this state has issued a driver’s license that has not expired, only if the financing statement provides the name of the individual which is indicated on the driver’s license.”  The law allowed for some errors by further providing that if a standard search under the correct name would reveal the financing statement, the error would be insignificant and would not defeat perfection.  Unfortunately for Regions, here the standard search did not turn up its UCC-1’s.

The Court found this fatal to perfection of Regions’ secured interest.  Since the purpose of UCC-1 financing statements is to provide notice to interested third parties of enforceable security interests on personal property, that purpose was entirely thwarted if the name defect meant a standard search would not reveal the financing statements.  The Court noted that the instructions on the UCC-1 form said the filer should “use [the] exact, full name [of the Debtor]; do not omit, modify, or abbreviate any part of the Debtor’s name.”  It reasoned that since Regions had notice and full opportunity to comply with the name requirements, the failure to perfect was its responsibility and the outcome was fair.

The Court easily dispensed with the res judicata and judicial estoppel assertions.  Under Georgia law, as under most state laws, the doctrine of res judicata required that the parties in the prior proceeding be the same parties as in the present matter.  Here, the debtor, as debtor in possession in the prior chapter 11, was not the same party as a chapter 12 trustee and therefore the trustee was not bound by the consent order.  Similarly, for judicial estoppel to apply, the party making the contrary assertion in the prior case must be the same party against whom estoppel is asserted.  Therefore, the fact that a chapter 12 trustee was a distinct party from the debtor defeated both arguments.


This case is instructive not just for creditors in Georgia, but for any creditors seeking to perfect personal property liens in any state.  Although the UCC Article 9 overhaul in 2006 was favorable to creditors because it largely simplified the perfection requirements, strict adherence to filing standards is still needed.  As the Georgia bankruptcy court noted, the purpose of the filing of a UCC-1 is to give notice to third parties of a creditor’s security interest.  If a creditor is sloppy and fills out the form incorrectly in a manner which will defeat that purpose – because the standard search logic of the state’s system will not reveal the UCC-1 – the perfection will be incomplete.  The strong-arm powers of a bankruptcy trustee will always trump that unperfected interest.  Any creditor can avoid this dire outcome by becoming familiar with each state’s search logic and making certain its filed documents will be found by the search.

The res judicata and judicial estoppel issues are also a useful reminder to all bankruptcy practitioners that a trustee in bankruptcy is not the same party as a debtor, even when the debtor was debtor in possession in a prior case.

The Commercial Finance Newsletter is written by an ad hoc group of the California Lawyers Association (CLA) Business Law Section.  This submission was authored by the Hon. Meredith Jury (U.S. Bankruptcy Judge, C.D. CA., ret.) a member of the ad hoc group.  The opinions expressed herein are solely those of the author.  Thomson Reuters holds the copyright to these materials and has permitted the Commercial Transactions Committee to reprint them. This material may not be further transmitted without the consent of Thomson Reuters.

This ebulletin was prepared by Walter K. Oetzell, Walter K. Oetzell, APC,

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