A bank with a security interest as described above is not required to send notice of its security interest to a party with a prior recorded purchase-money security interest. You may be thinking of the requirement that a party with a purchase-money security interest must send notice to a prior inventory-secured party in order to achieve priority over the earlier filed security interest in the same collateral. In your bank’s situation, the earlier recorded purchase-money security interest will have priority over the bank’s later-perfected inventory security interest with respect to the items covered by the purchase-money security interest, since the purchase-money security interest was perfected first. 

For resources related to our guidance, please see:

• Illinois UCC, 810 ILCS 5/9-324(b) (“ . . . a perfected purchase-money security interest in inventory has priority over a conflicting security interest in the same inventory . . .. if: . . . (2) the purchase-money secured party sends an authenticated notification to the holder of the conflicting security interest; . . .”)

• Illinois UCC, 810 ILCS 5/9-322(a)(1) (“Conflicting perfected security interests and agricultural liens rank according to priority in time of filing or perfection. . . .”)