accuracy of the name. If you have concerns about the debtor's name or the debtor goes by several names, we recommend you use all combinations of the debtor's name in the registration. For example, Alexander R. Levy could be described as (i) Alexander R. Levy, (ii) Alex Levy, (iii) Alexander Ragan Levy, and (iv) Alex R. Levy. In regards to a debtor corporation, you should be sure to have a copy of the articles of incorporation (or similar document) and any corresponding amendments in your possession. A registration of a corporate name should list both the English name and the French name, if applicable. It the corporation uses a business name, it is prudent to register this name as well. describe the collateral using words on the financing statement. Many years ago, describing the collateral using words was a requirement. However, under the current version of the PPSA, secured parties have the (recommended) option to simply check generic boxes describing the collateral such as "inventory" or "equipment," rather than describing the collateral in detail. The benefit of checking the generic boxes to describe the collateral is that it affords the secured party greater protection. The downside is that a third party will not be able to tell exactly what collateral you have secured and pros of additional protection must be weighed against the cons of potentially being bothered, generally speaking it is recommended that you check boxes rather than inserting words in the collateral description section of the financing statement. protection as a creditor, there must be "attachment" and "perfection" of a security interest. "Attachment" of a security interest to collateral happens when the following conditions are met (i) a security agreement is signed; (ii) it contains a description of the collateral; (iii) value is given; (iv) the debtor has rights in the collateral; and (v) the attachment has not been postponed. Assuming there has been attachment, perfection will require registration (the process involving the financing statement noted above) or possession (for tangible collateral only); the latter of which is beyond the scope of this article. The basic rules for determining priority are: (unregistered) security interest; security interests were perfected by registration, priority goes to the first to register, regardless of the order of perfection; if all were perfected by possession, priority goes to the first to perfect; or goes to the first to attach. Determining priority can be a complicated affair. statement will require you to list the duration over which you will have security in the specified collateral. If your security interest will last longer than the maximum duration allowed by the financing statement, it is imperative you file a financing change statement prior to the expiry of the original registration. Failure to file a financing change statement may result in your security interest becoming unperfected and in certain circumstances losing its priority status. Other examples of when a financing change statement should be registered generally include, but are not limited to, if the debtor changes its name or if all or part of the collateral is sold. properly navigated with care and attention to detail. If you are doing business in Ontario or considering doing business in Ontario and require advice on securitizing collateral, please feel free to contact me or another member of our team. |