Usually the fights about which creditor should get the collateral occurs in a bankruptcy proceeding. It is

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Usually the fights about which creditor should get the collateral occurs in a bankruptcy proceeding. It is very common for more than one creditor to have a security interest in personal property that is collateral per Art. 9 and for creditors to claim the right to foreclose on real [property in a bankruptcy. Then there are issues such as landlord's liens that may take precedence over the creditor who attached first, perfected first and stayed perfected first with the personal property that is locked up in the offices in a building but the debtor has not paid the rent. These are issues we have to consider in business plans, risk assessment and management and advising creditors.

Normally the secured creditor who attaches first, perfects first and stays perfected first has the first priority to repossess the collateral when the debtor defaults on his payment to the creditor. What if the creditor attached but failed to file and the creditor who attached second actually filed first? What if the property changes classification-like inventory is purchased by a consumer and the creditor and debtor created a PMSI in consumer goods in that collateral. Then the seller of the inventory to the retail store is not paid by the store-can the inventory seller repossess the consumer good in the cosumer's house? The answer is no because the seller of the inventory does not have a contract to allow them to repossess consumer goods.

Here is a scenario: Barney buys a refrigerator from Nice Appliances. It is a PMSI in consumer goods. Nice files the UCC-1 two days later. Nice never paid FrigSeller from whom they bought the refrigerator as inventory. Barney sells the refrigerator to his friend, Clarence, who needed it for his restaurant. Barney files the UCC-1 two days later. 6 months later, Nice does not pay FrigSeller and Clarence does not; pay Barney. The refrigerator is at Clarence's restaurant. Who can get the refrigerator?