Opinion ID: 3024056
Heading Depth: 1
Heading Rank: 4

Heading: The 1999 Fundings Were Secured Debt

Text: Having established that the District Court properly concluded the 1999 Fundings were debt, we turn to Cohen’s assertion that the Lenders did not present a valid secured claim. In determining whether claims asserted by creditors in bankruptcy are secured, state law applies. See In re Bollinger Corp., 614 F.2d 924, 925 n.1 (3d Cir. 1980). Cohen concedes that, whether one applies Delaware, Pennsylvania, California or New York law, the requirements to obtain a security interest are the same. Thus each state’s codification of Uniform Commercial Code (“U.C.C.”) §§ 9-203 and 9-302 existing in 1999 11 requires a written security agreement in favor of the lender describing the collateral and, for the collateral in question (inventory, equipment, receivables and general intangibles), the filing of a properly executed financing statement (unless the inventory and equipment are possessed by the lender or its representative, something normally, and here highly, impractical). Cohen contends that the Lenders did not comply with state U.C.C. law (and thus the requirements for assertion of a secured claim). The main source of contention is that financing statements filed by the Lenders only list “Equinox Investment 11 Since then, a revised Article 9 has been adopted in each state. 23 Partners, LLC, as Collateral Agent,” as the secured party.12 Cohen asserts that the listing of Equinox solely (and not also KB and Celerity) rendered the financing statement ineffective under the then-extant U.C.C. § 9-402(1), which stated that a “financing statement is sufficient if it gives the names of the debtor and the secured party, is signed by the debtor, gives an address of the secured party from which information concerning the security interest may be obtained, gives a mailing address of the debtor and contains a statement indicating the types, or describing the items, of collateral.” Official Comment 2 to then- U.C.C. § 9-402 indicated that Article 9 employed a “notice filing” system whereby financing statements needed only to indicate that a secured party “may have a security interest in the collateral described. Further inquiry from the parties concerned . . . [may] be necessary to disclose the complete state of affairs.” (Emphasis added.) In this context, “[t]he Uniform Commercial Code does not require that the secured party as listed in [a financing] statement be a principal creditor and not an agent.” Indus. Packaging Prods. Co. v. Fort Pitt Packaging Int’l, Inc., 161 A.2d 19, 21 (Pa. 1960). Because the financing statements name both SubMicron as debtor and Equinox as secured party, provide mailing addresses for both entities, and describe the 12 No claim is made that a security interest in the collateral was not created (the security agreements for the 1997 Notes and the 1998 Notes state that the collateral secures “the payment of all present and future indebtedness”), only that it was not properly perfected. 24 collateral that is subject to the security agreement, we conclude that any interested party would be on notice to communicate with Equinox regarding the status of its (and its principals’) interest in SubMicron’s assets. This is sufficient for Article 9 perfection purposes. Id. We also conclude that, on the record before us, there can be no doubt that KB and Celerity were intended secured parties served by their agent, Equinox. Indeed, in the schedule of liabilities filed with the District Court, SubMicron lists KB and Celerity as secured noteholders. The District Court found on the basis of overwhelming evidence that KB and Celerity were intended secured parties with respect to the 1999 Fundings and we discern no basis to believe this determination was erroneous. In sum, we conclude that the Lenders presented valid secured claims for the 1999 Fundings.