## Facts

- Alvo Grain and Feed, Inc. (Alvo), a Nebraska business, filed a Chapter 11 bankruptcy case.
- American Exchange Bank (the bank) claimed a lien on Alvo’s personal property, including accounts and other payment rights, inventory, and equipment.
- To perfect its security interest, the bank filed UCC financing statements with the Nebraska Secretary of State.
- Alvo’s correct legal name was “Alvo Grain and Feed, Inc.”
- The bank’s financing statements listed the debtor as “Alvo Grain & Feed, Inc.,” using an ampersand instead of the word “and.”
- Alvo and two unsecured creditors filed an adversary proceeding to avoid the bank’s lien, arguing the debtor-name error made the financing statements “seriously misleading” under Nebraska’s enactment of UCC Article 9.
- The bankruptcy case was converted to Chapter 7, and Richard D. Myers, the Chapter 7 trustee, was substituted as plaintiff.
- At trial, the trustee presented evidence that searches of the Secretary of State’s UCC records for “Alvo Grain and Feed, Inc.” using the filing office’s standard search logic did not disclose the bank’s financing statements.
- The trustee’s evidence described the Secretary of State’s search logic as an exact-match process that did not modify search terms, did not treat “and” and “&” as equivalent, and returned only debtor names that exactly matched the search input.
- The bank argued that a searcher could have located the filings with minimal additional effort by trying small variations, including the ampersand version of the name.

## Issues

1. Whether a UCC financing statement that names the debtor as “Alvo Grain & Feed, Inc.” instead of “Alvo Grain and Feed, Inc.” fails to sufficiently provide the debtor’s name under Nebraska UCC Article 9.
2. Whether the financing statements were “seriously misleading,” or instead saved by the UCC safe harbor because a search under the debtor’s correct legal name using the filing office’s standard search logic would disclose the filings.
3. Whether the bank could rely on the argument that a reasonable searcher could find the filings by trying name variations, even if the correct-name standard search did not return them.

## Decision

- The court determined that the financing statements’ debtor-name error rendered the filings “seriously misleading” under Nebraska’s Article 9 because a search using the debtor’s correct legal name, applying the Secretary of State’s standard search logic, did not reveal the bank’s financing statements.
- The court rejected the bank’s argument that the filings should be treated as effective because searchers could locate them by experimenting with alternative search terms.
- As a result, the bank’s security interest was treated as unperfected against the bankruptcy estate, allowing the trustee to avoid the lien.

## Legal Principles

- A financing statement must provide the debtor’s name as required by UCC Article 9; errors in the debtor’s name can invalidate the filing.
- Under UCC § 9-506, a financing statement that fails to sufficiently provide the debtor’s name is “seriously misleading” and generally ineffective to perfect the security interest.
- The statutory safe harbor applies only if a search of the filing office’s records under the debtor’s correct name, using the filing office’s standard search logic, would disclose the financing statement.
- The “seriously misleading” analysis focuses on the filing office’s standard search logic results for the correct legal name, not on whether a searcher could find the record by trying alternative inputs.
- If a financing statement is seriously misleading and therefore ineffective, a bankruptcy trustee may avoid the creditor’s unperfected security interest under the trustee’s avoiding powers.

## Conclusion

Myers held that the bank’s UCC financing statements were ineffective because they listed the debtor as “Alvo Grain & Feed, Inc.” rather than “Alvo Grain and Feed, Inc.,” and Nebraska’s standard search logic did not return the filings when the debtor’s correct legal name was used; the bank could not cure the defect by arguing that searchers could locate the filings through variant searches, so the trustee could avoid the lien as unperfected.


Myers v. American Exchange Bank (In re Alvo Grain and Feed, Inc.), 2009 Bankr. LEXIS 4259 (2009)