The business then timely appealed to the Eleventh Circuit.įlorida Statute § 679.5061 concerns the effect of errors or omissions in financing statements. The trial court, sitting in an appellate capacity, affirmed the bankruptcy court’s order. Thus, the bankruptcy court held the bank’s financing statements were not seriously misleading and were effective to perfect the bank’s security interest in all of the business’s assets. The parties eventually cross-moved for summary judgment, and the bankruptcy judge granted summary judgment for the bank, concluding that the bank’s financing statements fell under the “safe harbor” of Section 679.5061(3) because a search of the business’s correct legal name on the Registry’s website revealed that the financing statements were found on the page immediately following the initial page. The business filed a complaint asserting that the bank’s financing statements were “seriously misleading” under Florida Statute § 679.5061(2) and therefore ineffective to perfect the bank’s security interest. These filing statements identified the business by using an abbreviation instead of the business’s legal name, as listed in the articles of organization filed with the Florida Secretary of State. The bank, in an attempt to perfect its security interest in these assets, filed two UCC-1 Financing Statements with the Florida Secured Transaction Registry. These loans purported to be secured by a blanket lien on all of the business’s assets. The business and its affiliates were jointly and severally liable to a bank on two loans guaranteed by the U.S. Live Oak Banking Company is available at: Link to Opinion.Ī business and its affiliates filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code. In so ruling, the Eleventh Circuit applied Florida law as opined by the Florida Supreme Court in response to certified questions.Ī copy of the opinion in 1944 Beach Boulevard, LLC v. Court of Appeals for the Eleventh Circuit recently held that a bank did not perfect its security interest in a business debtor’s assets because the two UCC-1 Financing Statements filed with the Florida Secured Transaction Registry that failed to correctly name the debtor were “seriously misleading” under Florida Statute Section 679.5061(2), as the Registry does not implement a “standard search logic” necessary to trigger the safe harbor exception set forth in Florida Statute Section 679.5061(3).
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