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After acquiring secured loans from another bank, which are secured by blanket liens, should we amend the financing statements to include our bank’s name? – IBA Compliance Connection

IBA Compliance Connection

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After acquiring secured loans from another bank, which are secured by blanket liens, should we amend the financing statements to include our bank’s name?

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While the rules of priority often depends on the specific facts of each situation and the type of collateral covered by the financing statement, the general rule (with many exceptions) is that the first person to file financing statement or to perfect a security interest has first priority. 810 ILCS 5/9-322(a). Therefore, if the bank is filing new financing statements that do not relate back to the original financing statements, it could lose its first lien position on the collateral. However, if you are able to amend your financing statements without replacing the original financing statement, the amendment should not affect your lien priority.