Transactional Business Consultant Dan Lias explains what a UCC is and when your organization would need one. Because of the complexity of UCC transactions, he also discusses best practices and consequences of incorrect filings.
Related Article: What You Need to Know About Common
Uniform Commercial Code (UCC) Forms
TRANSCRIPT
I’m Dan Lias. I’m the Transactional Business Consultant at CT and I’ve been there for eight years.
What is a UCC?
A UCC generally is a form that parties use to solidify or notify the world of a business transaction between two or multiple parties.
Why file a UCC form?
It is essential to file a UCC because you’re trying to safeguard your priority or your position in line in the event that something goes wrong in the business deal.
How do companies normally handle UCCs?
There is no one right way to handle or manage a UCC However, there are certain guideposts that you can follow that can truly streamline your business flow--making sure you have your charter documents, making sure you do a search to reflect, making sure you’re using the exact name of a debtor when you’re doing your filing. Also, making sure that you’re compliant with each state’s unique filing or search requirements
What makes UCCs challenging?
What makes UCCs challenging is because there is the lack of true uniformity, it can be hard for people to juggle all those different laws and all the different requirements.
What are the consequences of an incorrectly filed UCC?
If you file correctly, the law protects you. It’s that simple. If you file improperly, the law will chew you up. You can truly go from being first in line and have all your rights protected, to being in the back of the line and being what’s deemed an unsecured creditor and have very few remedies.
What are some ways to improve the handling of UCCs?
There are a few ways you can improve the handling of the UCCs. And again, that comes with making sure that the front end of your process is as buttoned-down and exact as possible. Because the burden is on the filer, and therefore having all that information on the front end is essential.
Would you recommend having an outside provider help?
Outside providers, I think, are one hundred percent essential in this process. They give you that expertise, they give you an outside perspective, they give you that extra voice that I think is essential to making sure that this process is handled properly.
Trying to look at a UCC and what you should be looking for and what you should be considering, again, is accuracy, accuracy, accuracy. I know, you say it three times, it must be important, but it truly is.