## Facts

- Hickory Printing Group, Inc. granted Bank of Granite a security interest in personal property, including inventory and accounts receivable, and the Bank perfected by filing a UCC-1 financing statement.
- On December 1, 2008, the Bank filed a UCC-3 termination statement referencing the existing financing statement and collateral.
- On November 10, 2009, the Bank filed a UCC-5 correction (information) statement disputing the termination’s effect.
- On May 27, 2010, the Bank filed a new UCC-1 financing statement covering the same collateral.
- The debtor later sold substantially all assets to Hickory Printing Solutions, LLC (HPS) in a prepetition transaction; the Bank asserted its lien extended to proceeds.
- The debtor filed Chapter 7, and the trustee sued to determine lien validity and avoid the Bank’s interest, moving for partial summary judgment under 11 U.S.C. § 544(a) based on an alleged gap in perfection; the Bank filed a cross-motion.

## Issues

1. Whether the Bank’s December 1, 2008 UCC-3 termination statement was effective under Article 9 to terminate perfection of the security interest.
2. Whether the Bank’s November 10, 2009 correction (information) statement could revive or restore perfection after termination.
3. Whether, given a gap in perfection later cured by a new UCC-1, the trustee could avoid or subordinate the Bank’s lien under 11 U.S.C. § 544(a) as of the petition date.
4. Whether lien validity and priority could be resolved on partial summary judgment on the undisputed filing chronology.

## Decision

- The court denied the trustee’s motion for partial summary judgment.
- The court granted the Bank’s cross-motion in part, rejecting the trustee’s § 544(a) theory to strip the Bank’s lien.
- The court held the December 1, 2008 termination statement was effective to terminate the prior financing statement and end perfection as a matter of public record.
- The court held the November 10, 2009 correction (information) statement was legally ineffective to restore perfection.
- The court held the May 27, 2010 UCC-1 re-perfected the security interest only from its filing date, leaving a gap between termination and re-filing.
- The court held that because the Bank was perfected on the petition date, the trustee’s hypothetical lien creditor status under § 544(a) did not defeat the Bank’s perfected interest in the collateral/proceeds at issue.

## Legal Principles

- An authorized, properly filed UCC termination statement is effective to terminate a financing statement under Article 9, and its effect does not depend on the filer’s subjective intent.
- A UCC correction (information) statement does not amend, nullify, or revive the legal effect of prior filings; it is notice of a dispute only.
- When a financing statement is terminated and a new UCC-1 is later filed, perfection dates from the new filing; the prior filing date is not preserved through the gap.
- A trustee’s avoidance rights under 11 U.S.C. § 544(a) are evaluated as of the petition date; if a security interest is perfected on that date, § 544(a) generally cannot avoid it merely because perfection lapsed earlier and was later cured before bankruptcy.

## Conclusion

The court concluded that the Bank’s termination filing ended its original perfection and the correction statement could not undo that result, but because the Bank re-perfected before the bankruptcy petition, the trustee could not use § 544(a) to avoid or subordinate the Bank’s lien based solely on the earlier gap in perfection.


Ward v. Bank of Granite (In re Hickory Printing Grp., Inc.), 479 B.R. 388 (Bankr. W.D.N.C. 2012)