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TexLaw, Attorney
Category: Business Law
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Experience:  Internationational Commercial Attorney
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If I give a note to a creditor secured by a pledge of stock,

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If I give a note to a creditor secured by a pledge of stock, does the creditor have to file a UCC-1 filing to perfect the pledged collateral? Without the UCC-1 is the note secured at all?


Thank you for your question.

In order to perfect the security interest in the stock, the creditor must file a UCC-1. However, if the creditor does not file the UCC-1, it does not make the loan unsecured, it only makes the security interest unperfected. That means that if you went out and tried to use the stock as collateral on a separate loan or you become insolvent, it could result in a loss of the security interest by the creditor.

Please let me know if you need further information on this subject.


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