## Facts

- Jim Ross Tires, Inc. filed a Chapter 7 bankruptcy petition in 2006.
- Am-Pac Tire Distributors, Inc. and Tradition Bank asserted secured claims based on prepetition security interests and filed proofs of claim.
- The debtor’s registered organizational name in Texas public records was “Jim Ross Tires, Inc.”
- The debtor previously used the trade name “HTC Tires & Automotive Centers,” but the assumed-name certificate for that trade name expired in 2000.
- In 2002, Am-Pac filed a UCC financing statement listing the debtor as “Jim Ross Tires, Inc. dba HTC Tires & Automotive Centers.”
- In 2004, Tradition Bank filed a UCC financing statement listing the debtor as “Jim Ross Tire Inc.” (omitting the “s” in “Tires”).
- The Chapter 7 trustee objected to both claims and sought to avoid the asserted security interests, contending the financing statements failed Texas’s debtor-name requirements and were “seriously misleading.”
- The dispute turned on whether searches under the debtor’s correct registered name, using the Texas filing office’s standard search logic, would disclose each financing statement.

## Issues

1. Whether a financing statement naming the debtor “Jim Ross Tires, Inc. dba HTC Tires & Automotive Centers” sufficiently provides the debtor’s name for a registered organization under Texas Bus. & Com. Code § 9.503(a) and avoids being “seriously misleading” under § 9.506.
2. Whether a financing statement naming the debtor “Jim Ross Tire Inc.” (missing the “s”) sufficiently provides the debtor’s name under § 9.503(a) and, if not, is saved by § 9.506(c) based on Texas’s standard search logic.
3. Whether non-standard or manual search techniques can be used to avoid a “seriously misleading” determination under § 9.506(c).

## Decision

- The court sustained the trustee’s objections and ruled for the trustee.
- Am-Pac’s financing statement was seriously misleading because a search under the correct name using the filing office’s standard search logic did not disclose the filing.
- Tradition Bank’s financing statement was seriously misleading for the same reason; the missing “s” prevented disclosure in a standard search under the correct name.
- Because neither financing statement was effective, neither security interest was perfected as against the trustee, and the trustee could avoid the interests under 11 U.S.C. § 544.

## Legal Principles

- For a registered organization, a financing statement must provide the debtor’s name as indicated in the public organic record. Tex. Bus. & Com. Code § 9.503(a).
- A financing statement that fails sufficiently to provide the debtor’s name is “seriously misleading.” Tex. Bus. & Com. Code § 9.506(b).
- The § 9.506(c) safe harbor applies only if a search under the debtor’s correct name, using the filing office’s standard search logic, would disclose the financing statement.
- The secured party bears the risk of debtor-name inaccuracies; a seemingly minor deviation is fatal if it causes the filing to be missed in a standard-search query.
- Non-standard, creative, or manual searching does not satisfy § 9.506(c); the test is confined to the filing office’s standard search logic and the debtor’s correct registered name.
- Adding trade-name or “dba” language may render an otherwise accurate filing ineffective if the filing office indexes the full name string such that the filing is not returned in a standard search under the registered name.

## Conclusion

The bankruptcy court held that Texas Revised Article 9 requires accurate use of a registered organization’s exact public-record name for UCC perfection, and that debtor-name deviations that prevent disclosure in a standard-search query are “seriously misleading,” leaving the secured parties unperfected and vulnerable to avoidance by the Chapter 7 trustee under § 544.


In re Jim Ross Tires, Inc., 379 B.R. 670 (Bankr. S.D. Tex. 2007)