CPA · Question 11 · Area II: Business Law
Lender A lent Money to Debtor and perfected a security interest in Debtor's equipment on February 1. Lender B lent money to Debtor and perfected a security interest in the same equipment on March 1. On April 1, Lender A advanced additional funds to Debtor under a future advances clause in the original security agreement. Debtor defaulted. Who has priority regarding the April 1 advance?
Answer options:
Lender A, because the priority dates back to the original filing date.
Lender B, because the advance was made after Lender B perfected.
Lender B, because future advances require a new financing statement.
Pro rata based on the amount of debt owed.
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