## Facts

- Neil and Marie Hergert operated a farming business and filed a Chapter 12 bankruptcy case.
- Before bankruptcy, Pacific One Bank made multiple loans to the Hergerts, including commercial loans secured by agricultural and commercial security agreements covering equipment, inventory, chattel paper, accounts, general intangibles, farm equipment, and crops.
- Pacific perfected the commercial security interests by filing UCC financing statements that correctly identified Pacific and its addresses at the time of filing.
- Pacific also held a security interest in the Hergerts’ manufactured home, perfected by notation of the lien on the certificate of title.
- In 1998, Pacific merged into Bank of the West, which acquired Pacific’s assets, including the Hergerts’ loans and related security interests.
- After the merger, the existing financing statements still listed Pacific (with its prior addresses) rather than Bank of the West.
- The Hergerts filed an adversary proceeding seeking a declaration that the Bank’s security interests were unperfected as of the petition date due to the merger and the transition from former Article 9 to Revised Article 9 under Idaho law.

## Issues

1. Whether Bank of the West’s security interests were perfected on the petition date despite financing statements identifying the predecessor bank as secured party following a merger.
2. Whether the secured party name-and-address inaccuracy made the financing statements “seriously misleading” such that perfection was lost under former or Revised Article 9.
3. Whether Idaho’s Revised Article 9 transition provisions required a new filing or amendment to maintain perfection after the statutory change and the secured party’s merger.
4. Whether the manufactured-home lien remained perfected after the merger when perfection was by certificate-of-title notation.

## Decision

- Judgment was entered for Bank of the West.
- The court held the Bank’s security interests in the identified Article 9 collateral remained perfected as of the petition date.
- The court held the merger-related discrepancy in secured party information did not render the financing statements ineffective.
- The court held Idaho’s transition provisions preserved perfection for filings that were effective under former Article 9, without requiring refiling solely due to Revised Article 9’s adoption.
- The court held the manufactured-home lien remained perfected by the existing certificate-of-title notation, and no post-merger change was required to maintain perfection.

## Legal Principles

- Article 9 filing is a notice system; the central function of a financing statement is to alert searchers to a possible security interest so they can make further inquiry.
- A financing statement is not ineffective due to minor errors or omissions unless the defect is “seriously misleading” to a reasonable searcher.
- Changes in the secured party’s identity or address after filing, including by merger, do not generally defeat perfection where the filing continues to provide effective notice when searched under the debtor’s correct name.
- Transition provisions for Revised Article 9 can preserve the effectiveness of pre-revision financing statements that were properly filed and effective under the prior law, without requiring a new filing solely because the statutory scheme changed.
- Where state certificate-of-title law provides the method of perfection (e.g., manufactured homes), perfection is maintained by continued lien notation on the title notwithstanding a secured party merger, absent a statutory requirement to re-note or amend.

## Conclusion

The court determined that a secured party’s post-filing merger and resulting outdated secured-party information on financing statements did not, by itself, terminate perfection, and that Revised Article 9 transition rules preserved the effectiveness of previously valid filings; the Bank’s interests, including the manufactured-home lien perfected by title notation, remained perfected as of the bankruptcy petition date.


In re Hergert, 275 B.R. 58 (Bankr. D. Idaho 2002)