## Facts

- I80 Equipment, LLC, an Illinois truck refurbishing business, borrowed money from First Midwest Bank.
- The parties executed a March 9, 2015 security agreement granting the bank a security interest in substantially all of I80’s assets across numerous collateral categories and proceeds.
- The bank filed a UCC financing statement in Illinois that did not list collateral categories; it stated it covered “[a]ll Collateral described in” the identified security agreement.
- I80 later defaulted and filed a Chapter 7 petition.
- The bank sued the Chapter 7 trustee seeking a declaration that its security interest was properly perfected and senior; the trustee counterclaimed to avoid the lien under 11 U.S.C. § 544(a) as unperfected.

## Issues

1. Under Illinois’s enactment of UCC Article 9, does a financing statement “sufficiently indicate” collateral when it incorporates the collateral description by reference to an unattached security agreement, or must the financing statement contain a collateral description within its own text?

## Decision

- The Seventh Circuit reversed the bankruptcy court.
- The court held that, under Illinois UCC Article 9, a financing statement can “sufficiently indicate” collateral by referencing an identified security agreement’s collateral description, even if the agreement is not attached.
- Because the financing statement was sufficient, the bank’s security interest was perfected, and the trustee could not avoid it under § 544(a).
- The case was remanded for further proceedings consistent with the court’s holding.

## Legal Principles

- A UCC financing statement functions as notice filing; it need only provide enough information to alert third parties of a possible security interest and trigger further inquiry.
- Illinois UCC § 9-504 requires that a financing statement “indicate” the collateral; it does not impose the same level of detail demanded of a security agreement’s collateral description.
- A financing statement’s collateral indication may be satisfied through incorporation by reference to an identified external document, absent a statutory requirement that the collateral description appear within the financing statement’s four corners.
- A bankruptcy trustee’s avoidance power under 11 U.S.C. § 544(a) reaches only unperfected interests as of the petition date; a properly perfected Article 9 security interest is not avoidable on that ground.

## Conclusion

The Seventh Circuit held that Illinois Article 9 permits a financing statement to indicate collateral by referencing an unattached security agreement, thereby perfecting the secured creditor’s lien and defeating the trustee’s § 544(a) avoidance claim premised on lack of perfection.


In re I80 Equip., LLC, 938 F.3d 866 (7th Cir. 2019)