Business Law

Official Committee of Unsecured Creditors of Rancher’s Legacy Meat Co. (In re Rancher’s Legacy Meat Co.) (Bankr. D. Minn.)

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The following is a case update written by Hon. Meredith Jury, (United States Bankruptcy Judge, C.D. Cal. Ret.), analyzing a recent decision of interest:

A bankruptcy court in Minnesota recently ruled that a creditor, whose security interest had lapsed prepetition when the debtor changed its name, was unsecured because the creditor had failed to timely reperfect its interest even though it had viable options to do so. Official Committee of Unsecured Creditors of Rancher’s Legacy Meat Co. v Ratcliff (In re Rancher’s Legacy Meat Co.), 2020 WL 2026624 (Bankr. D. Minn. Mar. 23, 2020).

To view the opinion, click here.


James Ratcliff was one of the founders of Unger Meat Company (UMC) and in 2010 provided startup funds to the new company evidenced by two notes totaling about $14M. These notes were secured by a security agreement that granted Ratcliff a security interest in all equipment, inventory, accounts, and other tangibles and intangibles and also contained an after-acquired property clause. The security agreement was perfected by a UCC-1 filed with the Minnesota Secretary of State. UMC did not immediately prosper and Ratcliff and others sold their interest in the company to SSJR, LLC, which sale was finalized in 2014. In connection with the sale, the new owners amended the articles of incorporation to change the company’s name to Rancher’s Legacy Meat Co. Ratcliff was aware of this name change.

Four months later Ratcliff’s Financing Statement lapsed as a matter of law because the name change made it seriously misleading. Fourteen months after that lapse Ratcliff filed a UCC-3 Continuation Statement, listing the company’s name as Unger Meat Company. Three years later he filed a UCC-3 Amendment with the debtor listed as Rancher’s Legacy Meat Co. When the debtor commenced a chapter 11 in 2019, Ratcliff filed a secured claim. The Creditor’s Committee challenged the secured status of his claim, asserting his security interest was unperfected. In cross motions based on undisputed facts, Ratcliff argued that his UCC-3’s reperfected his interest in all corporate assets. The committee asserted that, even though Ratcliff could have reperfected his security interest by filing a new UCC-1 with the proper name, his UCC-3 filings were not the appropriate vehicle to reinstate his secured interest. The bankruptcy court ruled in favor of the committee, freeing the corporate assets from any secured claim.


Minnesota has adopted the UCC without major modifications to the relevant sections. The court looked to the provisions of § 9-506 (Effect of Errors or Omissions) and § 9-507 (Effect of Certain Events on Effectiveness of Financing Statement) to determine that the name change created a seriously misleading Financing Statement and that the correct method to reperfect the security interest was to file an Amendment to the Financing Statement within four months after the existing statement became seriously misleading. Since Ratcliff had not done that, the court next inquired “what happens to the security interest upon its lapse at the end of those four months?” Minnesota case law and the UCC had an answer for that question as well. So long as the language in the security agreement provides for it, as it did here, secured parties may file a second Financing Statement after the lapse of an initial Financing Statement; in fact this practice was common.

Unfortunately for Ratcliff he did not do that, instead flailing around by filing an untimely Continuation Statement and then much later attempting to amend that UCC-3 by correcting the debtor’s name. His steps did not comply with the statute, which is designed to give notice to third parties of the asserted security interest. The UCC-3’s lacked most of the information which is included in a UCC-1 and could not be substituted to give adequate notice of the claimed security interest. As a consequence, Ratcliff held no perfected security interest in the business assets on the petition date and was unsecured.


This is a sad outcome for Ratcliff whose substantial claims are now joined into the general unsecured class. Toughest of all is that even after he had failed to timely reperfect his interest within four months of the date his UCC-1 became seriously misleading (caused by the debtor’s name change), he still had an opportunity to save his position by filing a new UCC-1 with the necessary information to put other creditors on notice of his security interest. When he failed to do so before the bankruptcy petition was filed, the general unsecured creditors had a windfall and he suffered a serious loss.

The practice lessons are straightforward: when the object of a Financing Statement changes its name, existing UCC-1’s become seriously misleading. The quickest solution is to amend the UCC-1 with the correct name within four months of the change. But if that deadline is missed – say the creditor does not learn about the change until more than four months later – most creditors will be entitled to file a new UCC-1 based on the original security agreement; no need to obtain further signatures on any documents to do so. Be certain to act as soon as the change is known to avoid the strong arm power of a bankruptcy trustee or, for that matter, before another creditor makes a secured loan to the debtor. This case highlights the consequence of not following the requirements of the UCC.

These materials were written by Hon. Meredith Jury, (United States Bankruptcy Judge, C.D. Cal. Ret.), a member of the ad hoc group, with editorial contributions by Monique D. Jewett-Brewster, an attorney with Hopkins & Carley, ALC, a member of the ad hoc group and 2018-19 Chair of the CLA Business Law Section. Thomson Reuters holds the copyright to these materials and has permitted the Insolvency Law Committee to reprint them. This material may not be further transmitted without the consent of Thomson Reuters.

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