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I lent money to a business owner. He signed a UCC financing statement to secure his business assets as collateral,

San Francisco, CA |

and I do not know how to enforce it. I have foreclosed on real estate after lending to someone, and understand that process. But how do I enforce or "foreclose" on a business and its assets, having a signed and recorded UCC-1 financing collateral statement?

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Attorney answers 3


Article 9 of the Uniform Commercial Code prescribes a statutory framework governing the foreclosure process for security interests in personal property. The default provisions of Chapter 6 of the Revised Uniform Commercial Code (Section 9-601 through 9-629) set forth these security interests. As a secured creditor, you need to determine the best and safest way to sell the assets: public sale, private sale or accepting the collateral as partial or full satisfaction of the debt (UCC 9-610, 9-621-9-623). If you choose either of the first two options, you need to determine who should conduct the sale, how it should be advertised, whether a landlord waiver exists, etc. The norm is to employ a professional such as an auctioneer. When selling to former insiders or management of the debtor privately, take extra care to avoid challenges and claims of bad faith, fraudulent conveyance, etc. Having a fiduciary such as an assignee for the benefit of creditors act as the "sales agent" of the secured party, may insulate the secured party and substantially reduce the exposure to a successful challenge to the disposition.

This response shall neither be deemed to create an attorney-client relationship nor constitute legal advice but rather is intended to provide general information about a complex legal issue.


I am not licensed to practice in California, but any good California lawyer should be able to guide you through the process of enforcing your security interest in the collateral secured by the Security Agreement and UCC-1. I would suggest you contact an attorney in your area as soon as possible so that the value of your collateral is not impaired or dissipated.

This response does not create an attorney client relationship, and is for general information purposes only. You should promptly contact an attorney in your area to ascertain your legal rights.


There are many factors to consider in determining if you have a valid security interest in the business collateral. You may have a signed U.C.C. statement, but, was it executed properly, was it filed, was the lien "perfected?" If any of things were not done in accordance with the laws governing secured transaction, you may not have a lien at all, or your interest may be subordinated to someone else's. You should contact a lawyer in your area to find out.

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