“All Asset” Agreement to Secure Loan Debated in Second Circuit

When secured creditors place an “all asset” agreement in their financing statement, they should be aware that less may be more. When First Niagara Bank supplemented the typical “all assets” language in its security agreement with a property description, the bank opened the door for some complex litigation.

When secured creditors place an “all asset” agreement in their financing statement, they should be aware that less may be more. When First Niagara Bank supplemented the typical “all assets” language in its security agreement with a property description, the bank opened the door for some complex litigation.

In hearing the case of Ring v. First Niagara Bank NA, the Second Circuit sent notice to secured creditors that they should be careful in drafting their financing statements. First Niagara Bank intended to include all the debtor’s assets as collateral for a loan. However, when drafting the financing statement, First Niagara Bank supplemented the traditional “all assets” language with the additional language of “including, but not limited to, all assets located at [specific address where the collateral was located.]” The financing statement was subsequently filed to perfect their secured party status.

Since the filing of the financing statement, the debtor moved its location and, therefore, the location of the collateral. Additionally, the debtor changed the name of its corporation. First Niagara Bank amended the filings within the state’s UCC filing system to indicate the new name and address of the debtor, but they failed to change the collateral description. Several months later, after realizing the description was inaccurate, First Niagara Bank attempted to amend the filings again.

Eighty-eight days after the second amendment, the debtor filed for bankruptcy under Chapter 11. Because the code allows a bankruptcy trustee to void any transfer made within 90 days from the petition date, First Niagara Bank could not perfect its interests with the new amendments. Therefore, the case before the Second Circuit was to determine whether the earlier filings were sufficient to cover the assets that are now at a new location.

Fortunately for First Niagara Bank, the court found that the financing statement did cover the intended assets, even though they were no longer located at the place indicated when perfected. The court came to this conclusion by relying heavily on the “including, but not limited to” language. In reading that language, the court found that the financing statement still indicated the assets as collateral to the loan.

After the Second Circuit’s decision, businesses should refrain from becoming overly detailed in the “all assets” collateral descriptions. A creditor is provided with no benefit by using the additional language because the court has already held that the term “all assets” is already sufficient. Instead, it exposes them to increased litigation. In completing a financing statement, parties should seek review from an attorney.

From the initial startup of your business to any issues you may encounter along the way, you can rely on Hobson-Williams, P.C. for effective and diligent representation in all your business’ legal matters. The attorneys at Hobson-Williams, P.C. are skilled and knowledgeable in the area of business law and commercial transactions. Contact us at (718) 210-4744 for the quality representation that you deserve.

Author: Tanya Hobson Williams

Appointed to the bench by the Board of Trustees in 2008, and elected in 2009, Tanya Hobson-Williams was the first African-American Female Justice in the Incorporated Village of Hempstead. Tanya Hobson–Williams obtained her B.A. in Government and Politics from St. John’s University and her law degree from Benjamin N. Cardozo School of Law. Tanya Hobson-Williams has an active elder law practice assisting senior citizens in obtaining Medicaid for Home Care and Nursing Home Care. She routinely lectures at senior citizen centers, assisted living facilities, law schools and counsels families on a variety of topics of concerns to families caring for the elderly.

Leave a Reply

Your email address will not be published. Required fields are marked *


The reCAPTCHA verification period has expired. Please reload the page.

Testimonials

“I want to take this time to thank Tanya and Keith for their professionalism and their ability to keep me calm during this process. Tanya was very helpful in explaining the whole guardianship process and my next steps. Despite my numerous emails, I never felt ignored or that they were growing weary of me. Even after being granted guardianship when I had an issue with the bank releasing money Tanya stayed calm and found a way to get what I was entitled to. I hope I never need to do this again but if I do, I will definitely come back to Tanya and her team. Thank you Thank you Thank you. Love from Bermuda.”

-K. Durham.
(An attorney in Bermuda transferring a Bermudian guardianship to NY)

Read More »

  • Elder Law Attorney Serving Queens Bronx Brooklyn

    Elder Law

    Elder Law encompasses a broad range of legal matters. It is important for everyone, regardless of age or health, to plan for the future.

  • Guardianships Attorney Serving Queens Bronx Brooklyn

    Guardianships

    The legal system recognizes that some adults, whether due to disease, dementia, mental deterioration, or disability, are unable...

  • Medicaid / Medicare Fraud Attorney Serving Queens Bronx Brooklyn

    Medicaid / Medicare Fraud

    Medicaid is a joint state and Federal program that provides insurance to individuals based upon their income and resources, while Medicare...

  • Reverse-Mortgage Foreclosures Attorney Serving Queens Bronx Brooklyn

    Reverse-Mortgage Foreclosures

    Reverse mortgages are becoming an increasingly popular way for aging homeowners to refinance...

  • Landlord-Tenant Attorney Serving Queens Bronx Brooklyn

    Landlord-Tenant

    Landlord Tenant law can be a complex and confusing subject. Disputes over leases and rent payments are often emotionally...

  • Business Law Attorney Serving Queens Bronx Brooklyn

    Business Law

    From the initial startup of your business to any issues you may encounter along the way, you can rely on Hobson-Williams, P.C. for effective...

  • Collections Attorney Serving Queens Bronx Brooklyn

    Collections

    Hobson-Williams, P.C. has a full-service debt collections department, with experienced debt-collection attorneys who will...

  • Real Estate Transactions Attorney Serving Queens Bronx Brooklyn

    Real Estate Transactions

    Many people question why they need an attorney to purchase or sell a home.

Litigator of the Year
Women-Owned Law Firm
Long Island's 50 Top Women
Minority-Owned Law Firm
Brooklyn Bar Association
Queens County Bar Association
New York State Bar Association
Lawyers of Distinction
Outstanding Women in Law

24 hour service
Call Toll-Free:
24 Hours a Day, 7 Days a Week

Phone: 1-866-825-1LAW
Phone: 1-866-825-1529

Queens Office:

  • 87-01 Midland Parkway, Lobby A
    Jamaica Estates, New York 11432
  • Phone: 718-210-4744
  • Fax: 718-928-2210

Brooklyn Office:

  • By Appointment Only
  • Phone: 718-210-4744
  • Fax: 718-928-2210
Skip to content