Lien Invalidations from Inadequate Collateral Descriptions

$Full loan value exposure; typical C&I loan $1M-$10M; loss of secured position to unsecured claim or bankruptcy trustee • $Full loan value loss per loan with inadequate description; branch portfolios $50M-$500M+, multiple loans affected over time • $Full loan value loss; audit identified risk but too late to fix; auditor sees breakdown in control environment post-loss

Assume real property filing is sufficient; personal property collateral description done hastily; no coordination between real estate counsel (who files mortgages) and commercial counsel (who files UCC); verbal understanding of what's covered rather than explicit description • Audit separates real estate review (mortgage audit) from UCC review; mortgage descriptions are detailed; UCC descriptions audited separately and often found inadequate; audit finding triggers escalation but remediation timeline not enforced before default • Auditor uses checklist or sampling approach; looks for 'is collateral description present?' but not 'does it meet UCC §9-108 standards?'; findings documented in audit report; business unit given remediation timeline (60-90 days) but no enforcement; audit finding sits in compliance system until bankruptcy occurs