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ComplianceFinanceMarch 17, 2017

Monitor borrowers’ business entity status

It is important for lenders to learn of changes to a borrower’s name and to learn if the business organization is no longer in good standing in its formation state. Not all borrowers notify lenders of these changes. This is true even though most security agreements include mandatory notification clauses and require debtors to respond to regular inquiries regarding their affairs. However, enforcing these requirements can be a challenge.

Even so, Article 9 of the UCC has very specific rules for continued perfection that require the lender to make certain filings, within certain timeframes, when a debtor changes its name, location, or both, so lenders must stay aware of these changes.

The solution is for lenders to proactively monitor borrowers themselves. Business entity monitoring provides notification to the lenders of name or status changes. In the case of a registered entity debtor, the lender may also monitor new corporate, LLC, etc. filings, and amendments to existing filings. With defaults too prevalent in today’s economy, monitoring is an important best practice.

Robb Zurek
Senior Marketing Manager
Robb Zurek is Senior Marketing Manager for Wolters Kluwer Lien Solutions. Zurek’s primary focus is thought leadership, and content and demand generation. He creates and implements key marketing initiatives to position the company as an industry leader in providing lien management, risk management, and life-of-loan services.