## Facts

- Pickle Logging, Inc., a Georgia logging company, filed Chapter 11 on April 18, 2002 and operated as debtor-in-possession.
- Deere Credit, Inc. financed logging equipment and claimed a security interest in a John Deere 548G skidder (serial no. DW548GX568154).
- Deere’s security agreement and UCC-1 financing statement described the collateral instead as a John Deere 648G skidder with serial no. DW648GX568154 (each number off by one digit).
- The debtor owned both 548G and 648G skidders, and the 548G and 648G were materially different in appearance, price, and performance.
- The security documents contained no additional identifying information that would alert a third party that the listed model and serial numbers were mistaken.
- In adequate-protection and valuation proceedings, the court initially ruled (Sept. 3, 2002) that Deere lacked a perfected security interest in the 548G skidder and excluded it from Deere’s adequate-protection value base.
- Deere moved for reconsideration, arguing the description error was minor and not seriously misleading.

## Issues

1. Whether a security agreement and financing statement that list the wrong skidder model and serial number “reasonably identify” the debtor’s 548G skidder under O.C.G.A. § 11-9-108(a).
2. Whether one-digit errors in both model and serial numbers are “seriously misleading” where the erroneous description coherently points to a different asset the debtor also owns.
3. Whether the debtor-in-possession, as a hypothetical lien creditor, can treat the lender as unperfected and subordinate as to the misdescribed collateral.
4. Whether the court should alter its earlier ruling on Deere’s motion for reconsideration.

## Decision

- The court denied Deere’s motion for reconsideration and left the prior order in place.
- The court held Deere did not have a perfected security interest in the 548G skidder because the documents did not reasonably identify that collateral under O.C.G.A. § 11-9-108(a).
- The combined errors were seriously misleading to third parties because nothing on the face of the documents suggested a mistake, and the description matched a different machine.
- As a result, Deere was treated as unperfected (and effectively unsecured) as to the 548G skidder for bankruptcy priority and adequate-protection purposes.

## Legal Principles

- Under O.C.G.A. § 11-9-108(a), collateral is sufficiently described only if the description reasonably identifies what is described.
- A collateral description can be seriously misleading even if errors are small, when the description is internally consistent and plausibly identifies different property.
- A debtor-in-possession has trustee-like “strong-arm” powers and the status of a hypothetical lien creditor; under Georgia law, a lien creditor has priority over an unperfected security interest.
- In bankruptcy, failure to perfect a security interest due to an inadequate collateral description can cause the secured party to lose priority and related adequate-protection treatment as to that asset.

## Conclusion

The bankruptcy court held that Deere’s mistaken model and serial number description failed to reasonably identify the debtor’s 548G skidder and was seriously misleading to third parties, leaving Deere unperfected and subordinate to the debtor-in-possession’s lien-creditor status; reconsideration was denied.


In re Pickle Logging, Inc., 286 B.R. 181 (Bankr. M.D. Ga. 2002)