667 B.R. 878
9th Cir. BAP2025Background
- Global One Media, Inc., a Delaware corporation, obtained loans from Newtek Small Business Finance, LLC, secured by personal property in Nevada and New Mexico.
- Newtek perfected its security interest by filing UCC-1 financing statements in Nevada and New Mexico but not Delaware.
- The Subchapter V trustee objected to Newtek's secured claim, arguing perfection required filing in Delaware, the debtor’s state of incorporation.
- The bankruptcy court overruled the objection, siding with Newtek that local filings in Nevada and New Mexico sufficed.
- On appeal, the Bankruptcy Appellate Panel reviewed whether Newtek’s filings were sufficient to perfect its security interest in the debtor's personal property.
Issues
| Issue | Plaintiff's Argument (Shapiro) | Defendant's Argument (Newtek) | Held |
|---|---|---|---|
| Whether Newtek perfected its security interest in debtor's personal property. | Filing must be in Delaware under UCC's "location of debtor" rule. | Perfection can occur in the state where the collateral is located (Nevada/New Mexico). | Court agreed with Shapiro; reversed below. |
Key Cases Cited
- In re Qualia Clinical Serv., Inc., 441 B.R. 325 (8th Cir. BAP 2010) (perfection of a security interest is governed by the state of the debtor's incorporation, not where the property is located)
- In re Aura Sys., Inc., 347 B.R. 720 (Bankr. C.D. Cal. 2006) (Revised Article 9 of the UCC simplifies the perfection process by requiring filings in the state of incorporation regardless of collateral location)