Not every creditor who claims a security interest actually has a valid, perfected lien. In some ABCs, the most important work the assignee does is verifying which security interests are legally enforceable.
How Lien Validity Is Analyzed
The assignee reviews each claimed security interest and verifies: whether a UCC financing statement was properly filed and is current, whether the collateral description covers the assets claimed, whether the lien was properly perfected before the assignment, and whether any defects exist. Liens perfected within 90 days of the assignment may be preferential and avoidable.
An unperfected lien is an unsecured claim. A lender who failed to file a UCC-1, filed it in the wrong state, or let it lapse has an unsecured claim — not a secured one. This can dramatically change the distribution waterfall. Assignees who do this analysis carefully sometimes find that what appeared to be a secured-creditor-dominated estate has significant equity for unsecured creditors.
The California ABC System gives business owners and creditors the exact tools, templates, and step-by-step guidance to navigate an Assignment for Benefit of Creditors — faster and cheaper than bankruptcy. Request your free evaluation here.
California ABC System — Assignment for Benefit of Creditors 
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