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Money Games, Inc

In:

Submitted By neidalina
Words 472
Pages 2
Neidalina Ortiz
Business Law
Instructor : Jacqueline De Santis

You are the chief executive officer of Money Games Inc.(MGI), which has begun to market Borrow & Spend, a video game set in the world of finance. To buy ads, MGI borrows $50,000 from First Savings Bank. On MGI's behalf, you sign a note for the loan and offer its accounts receivable as collateral. You sign a security agreement that describes the collateral. The bank does not file a financing statement.

Has the banks security interest attached?
If so, when?

In order for the safekeeping interest to be accomplished it must first be recorded; which is done with a financing statement. In order to succeed in perfecting the security interest in the accounts receivable, a UCC-1 has to be filed with the state. This then gives all of the creditors a notice that the security interest has indeed been perfected or even attached if there wasn’t any security interest before. This also aids that an additional creditor who has secured debt with a security arrangement can and will not be before First Savings Bank. Without a financing statement, First Saving Bank can be susceptible to be second to a subsequent secure creditor, or even a lien holder. Of course the loan is secured by the security agreement, but the agreement is not effective against secured creditors. Hypothetically speaking, First Savings Bank can take the collateral if there was a default, but no bank will really do the deal without having and filing a financing statement to keep on record.
There are some risks of not filing a financing statement. With that, there are plenty of host of creditors, both federal and state tax liens and obviously other secured creditors. In this situation, there are creditors that can come in and be over First Savings Bank. The reason being is because there was no financing statement that was filed. If MGI had

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