The Second Circuit Court of Appeals sent a clear message to secured creditors with its recent decision, Ring v. First Niagara Bank, N.A. (In re Sterling United, Inc.),1 that in the case of a collateral description in a financing statement for blanket liens covering all of a debtor’s assets — less is more. In the case, the secured party, First Niagara Bank, supplemented its “all assets” UCC-1 description with the phrase “including but not limited to, [all assets located at]”, followed by a specific address where the collateral was located.2 When the debtor later moved to a new location, this unnecessary additional phrase almost backfired on the secured party when a bankruptcy trustee moved to avoid the financing statement as a preference.3 The Court ultimately found after protracted litigation that the collateral description was sufficient, but First Niagara’s experience serves as a reminder to creditors (and their attorneys) that a simple “all assets” UCC-1 description limits the risk of future litigation.
1 Ring v. First Niagara Bank, N.A. (In re Sterling United, Inc.), No. 15–4131–bk (2d Cir. Dec. 22, 2016) (Summary Order).
2 Id., at * 4
3 See id.