The core issue in this scenario revolves around the priority of security interests when a debtor defaults on multiple obligations secured by the same collateral. Under West Virginia’s Article 9 of the Uniform Commercial Code, particularly concerning the perfection of security interests and the rules of priority, a secured party’s rights are determined by the timing and method of their perfection. In this case, Appalachian Bank perfected its security interest in the timbering equipment by filing a financing statement in the appropriate jurisdiction before the bankruptcy filing. This filing establishes Appalachian Bank’s priority against most other creditors, including the bankruptcy trustee, who generally stands in the shoes of a hypothetical lien creditor. Mountain State Credit Union’s security interest, while granted earlier, was not perfected by filing or possession before the bankruptcy. This means Mountain State Credit Union is an unperfected secured party. Under West Virginia UCC § 9-317(a)(2), an unperfected security interest is generally subordinate to the rights of a person entitled to priority under Section 9-317(a)(1), which includes a lien creditor. The bankruptcy trustee, as a statutory lien creditor, obtains rights superior to those of an unperfected secured party. Therefore, Appalachian Bank, having perfected its security interest prior to the bankruptcy filing, holds a priority claim to the timbering equipment over Mountain State Credit Union. The bankruptcy trustee’s rights are derivative of the debtor’s rights and are generally superior to unperfected claims.

The scenario involves a security interest in inventory. In West Virginia, as governed by Article 9 of the Uniform Commercial Code, a buyer in the ordinary course of business takes free of a security interest created by the seller even though the security interest is perfected and even though the buyer knows of its existence, unless the buyer knows that the sale is in violation of the security agreement. This is a fundamental protection afforded to ordinary course buyers to ensure the smooth flow of commerce. The key is that the buyer must be “in the ordinary course of business.” This means the buyer purchases goods in good faith and without knowledge that the sale violates the security agreement. Here, the purchase of widgets by Appalachian Appliances from Mountain Manufacturing’s inventory, a sale of widgets by a merchant dealing in goods of that kind, clearly establishes Appalachian Appliances as a buyer in the ordinary course of business. Even though Mountain Manufacturing has granted a security interest to First National Bank, and that security interest is perfected, Appalachian Appliances’ status as an ordinary course buyer generally cuts off the bank’s security interest in the purchased inventory. The fact that Appalachian Appliances was aware of the bank’s perfected security interest does not, by itself, mean the sale was in violation of the security agreement. Unless Appalachian Appliances had knowledge that the specific sale of widgets was unauthorized by the secured party or was otherwise in violation of the security agreement’s terms concerning disposition of collateral, its interest in the widgets is superior to the bank’s security interest. Therefore, First National Bank cannot repossess the widgets from Appalachian Appliances.

In West Virginia, under Article 9 of the Uniform Commercial Code, the perfection of a security interest in a deposit account is generally achieved by control. Control over a deposit account is established when the secured party is the bank in which the deposit account is maintained, or when the secured party obtains the agreement of the bank in which the deposit account is maintained that the bank will comply with instructions from the secured party directing the disposition of the funds in the deposit account without further consent from the debtor. This is outlined in West Virginia Code § 46-9-104. While filing a financing statement is the primary method of perfection for many types of collateral, it is insufficient for perfection of a security interest in a deposit account. Possession is also not a method for perfecting a security interest in a deposit account. Therefore, the only method to achieve perfection for a security interest in a deposit account, as per West Virginia UCC Article 9, is through control.

The scenario involves a secured party, Appalachian Mining Corp. (AMC), which has a security interest in all of its present and after-acquired equipment. The debtor, Kanawha Construction LLC (KCC), has defaulted. AMC filed a financing statement in West Virginia, which is the location of KCC’s chief executive office. KCC purchased a new excavator from a seller in Kentucky, and the seller retained a purchase-money security interest (PMSI) in the excavator. The seller filed a financing statement in Kentucky. AMC did not file a new financing statement after KCC acquired the new excavator. Under West Virginia Code § 46-9-324, a perfected PMSI in equipment has priority over a conflicting security interest in the same equipment if the PMSI is perfected when the debtor receives possession of the collateral or within twenty days thereafter. However, to maintain this priority against a conflicting security interest perfected by a fixture filing or a conflicting security interest in the collateral, the purchase-money secured party must have perfected its security interest in accordance with the UCC’s filing provisions. For equipment, perfection occurs by filing a financing statement. West Virginia Code § 46-9-316 specifies that if a security interest has been perfected in one jurisdiction and then collateral is brought into another jurisdiction, the perfection of the security interest remains perfected for a period of four months after the collateral enters the new jurisdiction. If the security interest is not perfected in the new jurisdiction before the expiration of that period, it loses its perfected status. In this case, the excavator was purchased in Kentucky, and the seller filed in Kentucky. KCC’s chief executive office is in West Virginia, and AMC filed in West Virginia. The excavator was likely brought into West Virginia shortly after purchase. AMC’s security interest is perfected in West Virginia. The seller’s PMSI was perfected in Kentucky. For the seller’s PMSI to have priority over AMC’s perfected security interest in West Virginia, the seller would need to have perfected its security interest in West Virginia within the four-month grace period provided by West Virginia Code § 46-9-316, or by filing a financing statement in West Virginia before AMC’s security interest attached or was perfected, whichever occurred first. Since the seller only filed in Kentucky and KCC’s chief executive office is in West Virginia, and assuming the excavator was brought into West Virginia within the four-month period after its purchase in Kentucky, the seller’s PMSI would have become unperfected in West Virginia after four months unless they filed in West Virginia. AMC’s security interest is perfected in West Virginia. Therefore, AMC’s perfected security interest in after-acquired equipment, which includes the excavator, would have priority over the seller’s unperfected PMSI in West Virginia after the four-month period expires. The question asks about the outcome of a repossession action by AMC. If the seller’s PMSI is no longer perfected in West Virginia, AMC’s perfected security interest would prevail. Thus, AMC can repossess the excavator. The correct answer is that AMC’s perfected security interest has priority.

In West Virginia, under Article 9 of the Uniform Commercial Code, a purchase money security interest (PMSI) in consumer goods generally does not need to be filed to be perfected. Perfection, in this context, means that the secured party’s interest is effective against third parties. For consumer goods, which are defined as goods used or bought for use primarily in personal, family, or household purposes, a PMSI is automatically perfected upon attachment. Attachment occurs when the secured party gives value, the debtor has rights in the collateral, and a security agreement is in existence that describes the collateral. Therefore, if a lender finances the purchase of a refrigerator for an individual’s home in West Virginia, and that refrigerator qualifies as a consumer good, the lender’s PMSI in the refrigerator is perfected without the need for filing a financing statement. This automatic perfection provides a significant advantage to lenders extending credit for such purchases, simplifying the perfection process. Other types of collateral, such as inventory or equipment, would typically require filing a financing statement to achieve perfection, even for PMSIs.

The core issue in this scenario revolves around the perfection of a security interest in fixtures under West Virginia’s Article 9. According to West Virginia Code § 46-9-334, a security interest in fixtures is perfected by a fixture filing. A fixture filing is a UCC financing statement that indicates it covers fixtures and is filed in the real estate records office for the county where the affected real property is located. The financing statement must also reasonably describe the real property. In this case, Appalachian Bank properly filed a fixture filing in the real estate records of Kanawha County, West Virginia, identifying the property as “Parcel 1, Lot 3, Meadowbrook Subdivision.” This filing was made before the construction loan was advanced by Mountaineer Mortgage. Because Appalachian Bank’s security interest was perfected by a fixture filing before Mountaineer Mortgage’s interest attached, Appalachian Bank has priority. Mountaineer Mortgage’s failure to file a fixture filing means its interest in the fixtures is unperfected as against Appalachian Bank’s prior perfected security interest. Therefore, Appalachian Bank has the superior claim to the fixtures.

In West Virginia, under Article 9 of the Uniform Commercial Code, the perfection of a security interest in a deposit account is generally achieved by control. Control over a deposit account is established when the secured party is the bank with which the deposit account is maintained, or when the secured party obtains the agreement of the bank with which the deposit account is maintained to comply with the secured party’s instructions concerning the deposit account. This is a crucial distinction from other types of collateral, such as goods or instruments, where filing a financing statement is often the primary method of perfection. While filing is a common method for perfecting security interests in many types of collateral, it is explicitly excluded as a method of perfection for deposit accounts under UCC § 9-312(b). The UCC recognizes that the nature of a deposit account, being held by a bank, necessitates a different approach to ensure the secured party can effectively exercise its rights upon default. Therefore, obtaining control, typically through a tri-party control agreement or by being the depositary bank itself, is the exclusive means of perfecting a security interest in a deposit account.

The scenario involves a debtor, “Appalachian Artisans,” granting a security interest in its inventory to “First National Bank” (secured party). The security agreement is properly perfected by filing a financing statement in West Virginia. Subsequently, Appalachian Artisans sells a piece of inventory, a handcrafted quilt, to “Mountain Market,” a buyer in the ordinary course of business. Under West Virginia Code § 46-9-320, a buyer in the ordinary course of business takes free of a security interest created by the seller, even if the security interest is perfected and even if the buyer knows of its existence, unless the buyer knows that the sale is in violation of the security agreement. Since Mountain Market is a buyer in the ordinary course of business purchasing inventory from Appalachian Artisans, and there is no indication that Mountain Market knew the sale was in violation of the security agreement with First National Bank, Mountain Market takes the quilt free and clear of First National Bank’s security interest. The bank’s recourse is against Appalachian Artisans for breach of the security agreement.

The core issue here is the perfection of a security interest in a deposit account. Under West Virginia’s version of UCC Article 9, a security interest in a deposit account can only be perfected by control. Control is defined in West Virginia Code § 46-9-104 as obtaining the right to use or dispose of the deposit account. This can be achieved in three ways: (1) by becoming the bank’s customer with respect to the deposit account; (2) by an agreement among the debtor, secured party, and bank that the bank will comply with instructions from the secured party directing disposition of the funds; or (3) by the bank itself becoming the secured party. In this scenario, the secured party, Summit Bank, has an agreement with the debtor, Mountain Manufacturing LLC, and the depositary bank, River Valley Bank. This agreement explicitly states that River Valley Bank will comply with Summit Bank’s instructions regarding the deposit account. This constitutes control under the second method described in the statute. Filing a financing statement is generally not sufficient for perfection in deposit accounts; control is the exclusive method. Therefore, Summit Bank has perfected its security interest by control.

The scenario describes a situation where a lender, Appalachian Bank, has a security interest in collateral owned by a debtor, Mountain View Manufacturing, Inc. The security agreement was properly perfected by filing a financing statement in West Virginia. Subsequently, Mountain View Manufacturing experiences financial difficulties and sells some of the collateral, specifically a fleet of specialized manufacturing machines, to another West Virginia business, Summit Equipment Sales, LLC. Summit Equipment Sales is a buyer in the ordinary course of business. Under West Virginia’s Uniform Commercial Code Article 9, a buyer in the ordinary course of business generally takes free of a security interest created by the seller, even if the security interest is perfected, unless the buyer has actual knowledge of the security interest. The UCC § 9-320(a) provides this protection. In this case, Summit Equipment Sales purchased the machines from Mountain View Manufacturing, its seller, in the ordinary course of its business. There is no indication that Summit Equipment Sales had actual knowledge of Appalachian Bank’s security interest. Therefore, Summit Equipment Sales takes the collateral free of Appalachian Bank’s security interest. The key is that the security interest was created by the seller (Mountain View Manufacturing) and the buyer (Summit Equipment Sales) is a buyer in the ordinary course of business. If the security interest had been created by a prior owner and the seller did not create it, the analysis would differ, but here the seller is the debtor who granted the security interest.

The core issue here revolves around the perfection of a security interest in accounts that are part of a sale of a business. Under West Virginia’s UCC Article 9, specifically § 9-109(a)(3), a security interest is created in a “sale of accounts.” When a secured party files a financing statement, it generally perfects the security interest in the collateral described. In this scenario, the security interest in the accounts was properly perfected by filing a financing statement that clearly described the accounts as collateral. The subsequent filing of a financing statement by Bank B, which described “all assets” of the debtor, would not typically have priority over a prior perfected security interest in specific collateral unless Bank B’s interest was in a different category of collateral or its filing was somehow flawed. However, the question focuses on the perfection of the security interest in the accounts themselves. Since the initial filing by Lender A covered the accounts, and there’s no indication of a lapse in perfection or a competing purchase money security interest in the accounts that would qualify for special priority rules under § 9-324, Lender A’s perfected security interest in the accounts remains effective. The key is that a sale of accounts is a type of transaction that requires and is subject to Article 9, and perfection is achieved through filing. Therefore, Lender A’s prior perfected security interest in the accounts is the controlling factor.

Under West Virginia’s Article 9 of the Uniform Commercial Code, when a secured party has a perfected security interest in collateral and that collateral is sold in the ordinary course of business by the debtor, the buyer generally takes the collateral free of that security interest. This is a fundamental principle designed to facilitate commerce by ensuring that buyers in the ordinary course of business can acquire goods without being burdened by prior security interests. The secured party’s recourse is typically against the proceeds of the sale, as their security interest automatically attaches to identifiable proceeds under West Virginia Code § 46-9-315(a)(2). This attachment to proceeds is automatic and does not require a new filing or notification to the buyer. Therefore, if the collateral was indeed sold in the ordinary course of business by the debtor, the security interest held by Pinnacle Bank would continue in the identifiable proceeds of the sale, which in this case are the funds received from the sale of the excavators.

The core issue in this scenario revolves around the perfection of a security interest in collateral that is subject to a purchase money security interest (PMSI) and the subsequent filing of a financing statement by a different secured party. In West Virginia, as under Article 9 of the Uniform Commercial Code, a PMSI in inventory generally requires the secured party to file a financing statement before the debtor receives possession of the inventory and to send an authenticated notification to any other secured party who has filed a financing statement covering the same goods or has a perfected security interest in the same goods. This notification allows the other secured party to be aware of the PMSI. In this case, “Appalachian Equipment Finance” (AEF) has a PMSI in the construction equipment sold to “Mountain Builders Inc.” (MBI). AEF filed its financing statement on March 1st, which is within the twenty-day grace period under UCC § 9-317(e) for purchase money security interests. However, the critical point is that “Kanawha Valley Bank” (KVB) had already perfected its security interest in MBI’s after-acquired inventory by filing on February 15th. According to UCC § 9-324(a), a perfected PMSI in inventory has priority over a conflicting security interest in the same inventory if the PMSI creditor files a financing statement before the debtor receives possession of the inventory and the PMSI creditor gives notification to the holder of the conflicting security interest. The notification requirement is crucial for inventory PMSIs to gain priority over earlier-filed general security interests. Since AEF did not notify KVB of its PMSI before MBI received possession of the equipment, KVB’s prior perfected security interest in MBI’s after-acquired inventory will generally retain its priority. The filing by AEF on March 1st, while timely for perfection generally, does not cure the lack of notification required by UCC § 9-324(a) for PMSI priority in inventory over a previously perfected conflicting security interest. Therefore, KVB’s security interest has priority.

Under West Virginia’s Article 9 of the Uniform Commercial Code, a security interest in fixtures is perfected by filing a fixture filing. A fixture filing is a financing statement that is filed in the real property records of the county where the affected real property is located, and it must indicate that it covers fixtures and provide a description of the real property. The financing statement must also identify the debtor and the secured party. The UCC generally requires that the financing statement be filed before or within twenty days after the collateral becomes a fixture. If the debtor does not own the real estate, the secured party must also obtain the record owner’s consent for the filing. The priority of a fixture filing is generally determined by the time of filing. A properly filed fixture filing generally has priority over subsequent conveyances or encumbrances of the real property. However, a purchase-money security interest in a fixture has priority over a conflicting interest of an owner or encumbrancer of the real property if the purchase-money security interest is perfected by a fixture filing before or within twenty days after the goods become fixtures. The scenario involves a security interest in a specialized ventilation system installed in a commercial building. The secured party filed a standard UCC-1 financing statement in the Secretary of State’s office, not a fixture filing in the county real property records. This is insufficient for perfecting a security interest in fixtures. Therefore, the secured party’s interest is unperfected as to the fixtures.

The core issue in this scenario is determining the priority of competing security interests in after-acquired property. West Virginia’s UCC Article 9, specifically § 9-324, addresses purchase-money security interests (PMSIs) in inventory. A PMSI in inventory is perfected when the secured party has possession or control of the collateral or has filed a financing statement, and the debtor receives delivery of the inventory. Crucially, for a PMSI in inventory to have priority over a prior perfected security interest in the same inventory, the PMSI holder must satisfy specific notification requirements. The PMSI holder must have knowledge of the prior security interest and send an authenticated notification to the prior secured party that the debtor will be receiving inventory from the PMSI holder, and this notification must be received within six months before the debtor receives the inventory. Furthermore, the notification must state that the debtor is or will be receiving inventory under a PMSI. In this case, Appalachian Bank has a perfected security interest in all of Mountain Mining’s existing and after-acquired inventory. Green Valley Equipment provides new drilling machinery to Mountain Mining under a purchase-money security agreement. For Green Valley’s PMSI to have priority over Appalachian Bank’s prior perfected security interest in the new drilling machinery (which becomes after-acquired inventory for Mountain Mining), Green Valley must have provided the requisite notice to Appalachian Bank. The facts state Green Valley filed its financing statement but do not mention any notification to Appalachian Bank. Without this notification, Green Valley’s PMSI, despite being a PMSI, does not gain superpriority over Appalachian Bank’s earlier perfected security interest in the after-acquired inventory. Therefore, Appalachian Bank retains priority.

The question probes the nuances of perfection and priority in West Virginia secured transactions law, specifically concerning the interplay between a purchase money security interest (PMSI) in inventory and a prior perfected security interest in after-acquired inventory. Under West Virginia Code § 46-9-324(b), a PMSI in inventory has priority over a conflicting security interest in the same inventory if certain conditions are met. These conditions include that the PMSI holder must have perfected its security interest when the debtor receives possession of the inventory. Furthermore, the PMSI holder must give an authenticated notification to any prior secured party whose security interest covers the inventory. This notification must state that the PMSI holder expects to acquire a PMSI in inventory of a described type, and this notification must be sent before the debtor receives possession of the inventory. The prior secured party must also have knowledge of the contents of the notification. In this scenario, Aurora Bank holds a perfected security interest in all of Capitol Corp’s inventory, including after-acquired inventory. Bloom Industries acquires a PMSI in new inventory sold to Capitol Corp. For Bloom Industries to have priority over Aurora Bank’s prior perfected security interest in this new inventory, Bloom Industries must have provided the required notification to Aurora Bank *before* Capitol Corp received possession of the inventory, and Aurora Bank must have had knowledge of the notification’s contents. Since Bloom Industries sent the notification *after* Capitol Corp received possession of the inventory, it failed to meet the statutory requirement for establishing PMSI priority over the existing security interest in after-acquired inventory. Therefore, Aurora Bank retains its priority.

The scenario involves a secured party, “Appalachian Timber Corp.,” that has a perfected security interest in “Mountain View Lumber Co.’s” inventory, which includes logs and processed lumber. Mountain View Lumber Co. also owes a debt to “Kanawha Bank,” which has a security interest in the same collateral. Appalachian Timber Corp. filed its financing statement on January 15, 2023, and Kanawha Bank filed its financing statement on February 10, 2023. Both security interests are in inventory. Under West Virginia’s UCC Article 9, the priority of security interests is generally determined by the order of filing or perfection. In this case, Appalachian Timber Corp. filed its financing statement first, thus establishing its priority over Kanawha Bank’s subsequently filed financing statement. Therefore, in the event of default and disposition of the collateral, Appalachian Timber Corp. would have the first claim to the proceeds from the sale of the inventory. The specific date of perfection for both parties is tied to their respective filing dates, assuming no other perfection methods were employed or had priority. Since Appalachian Timber Corp. filed on January 15, 2023, and Kanawha Bank filed on February 10, 2023, Appalachian Timber Corp.’s security interest has priority.

The core issue here revolves around the priority of a purchase money security interest (PMSI) in inventory when another secured party has a prior perfected security interest in after-acquired inventory. Under West Virginia law, as governed by UCC Article 9, a PMSI generally has priority over other security interests in the same collateral. However, specific rules apply to PMSIs in inventory. For a PMSI in inventory to have priority over a prior perfected security interest in after-acquired inventory, the PMSI holder must satisfy two key requirements: (1) the PMSI must be perfected by filing a financing statement before the debtor receives possession of the inventory, and (2) the PMSI holder must give an authenticated notification to any other secured party who has previously filed a financing statement covering the same type of inventory, and that notification must be received within a specified timeframe before the debtor receives possession of the inventory. In this scenario, Appalachian Bank has a perfected security interest in all of Black Bear Timber Co.’s existing and after-acquired inventory. Mountain State Capital provides a loan to Black Bear Timber Co. to purchase new logging equipment, which constitutes inventory. Mountain State Capital’s security interest is a PMSI in this new equipment. For Mountain State Capital to have priority over Appalachian Bank’s earlier perfected security interest in after-acquired inventory, Mountain State Capital must have perfected its PMSI by filing a financing statement *before* Black Bear Timber Co. received possession of the logging equipment. Additionally, Mountain State Capital must have sent authenticated notification to Appalachian Bank that it expected to acquire a PMSI in inventory, and this notification must have been received by Appalachian Bank within the specified period before Black Bear Timber Co. received possession of the equipment. Since the facts state that Mountain State Capital filed its financing statement *after* Black Bear Timber Co. received possession of the logging equipment, its PMSI is not perfected in a timely manner to gain priority over Appalachian Bank’s prior perfected security interest in after-acquired inventory. Therefore, Appalachian Bank retains its priority.

The scenario involves a secured party, “Appalachian Equipment Finance LLC,” holding a security interest in inventory owned by a debtor, “Mountain State Mining Supplies.” The security agreement grants a purchase-money security interest (PMSI) in all of the debtor’s inventory. Appalachian Equipment Finance LLC properly files a financing statement with the West Virginia Secretary of State within the ten-day grace period after the debtor received possession of the collateral. Subsequently, another creditor, “Kanawha Capital Partners,” obtains a judgment against Mountain State Mining Supplies and levies on the same inventory. Article 9 of the Uniform Commercial Code, as adopted in West Virginia, generally prioritizes perfected security interests over unperfected ones, and often prioritizes PMSIs. In this case, Appalachian Equipment Finance LLC has a PMSI and has perfected it by filing. Kanawha Capital Partners has a judgment lien, which is a type of lien creditor. Under West Virginia Code § 46-9-317(a)(2), a perfected security interest generally has priority over a lien creditor. Furthermore, a PMSI in inventory, when perfected, generally has priority over conflicting security interests in the same inventory and over purchasers of that inventory. While Kanawha Capital Partners is a lien creditor and not a buyer, the perfection of Appalachian Equipment Finance LLC’s PMSI is key. The filing of the financing statement perfects the security interest. Since the filing occurred within the permissible timeframe and prior to Kanawha Capital Partners’ levy, Appalachian Equipment Finance LLC’s perfected PMSI in the inventory has priority over the judgment lien. Therefore, Appalachian Equipment Finance LLC can repossess and sell the inventory to satisfy its debt. The crucial element is the perfection of the PMSI in inventory.

The scenario involves a buyer of goods who, after receiving them, discovers a defect. Under West Virginia’s version of UCC Article 9, a buyer’s rights against a seller, particularly concerning a purchase money security interest (PMSI) or a security interest created by the buyer’s purchase of the collateral, are paramount. When goods are purchased on credit, and the seller retains a security interest, or when a third party finances the purchase and takes a security interest, the buyer’s rights as a debtor are central. The core issue here is the priority of claims. The seller’s security interest, even if unperfected, generally remains valid between the seller and the buyer. However, when a subsequent buyer in the ordinary course of business (BIOC) purchases the goods without knowledge of the security interest, their rights are protected under UCC § 9-320 (as adopted in West Virginia). In this case, the buyer, even if they have a security interest in the goods (perhaps from financing the purchase), is still subject to prior perfected security interests unless they qualify for a specific protection. The question tests the understanding of when a buyer’s interest is subordinate to a prior security interest. If the initial seller had perfected their security interest by filing a financing statement in West Virginia before the second transaction, or if the security interest was automatically perfected (as in a PMSI in consumer goods under § 9-309), the buyer’s subsequent interest, even if for value and possession, would be subordinate. The key is the timing and method of perfection of the initial security interest. Without perfection, the buyer’s claim might be superior if they took possession without knowledge. However, the question implies a scenario where the initial seller’s interest might have been perfected or otherwise protected. The most likely scenario for the buyer’s interest to be subordinate is if the seller had a perfected security interest in the goods prior to the buyer’s purchase. West Virginia follows the general UCC rules on perfection and priority. A perfected security interest generally has priority over an unperfected one, and over a buyer who does not take possession free of the security interest. The buyer’s failure to obtain possession free of the security interest, or the existence of a prior perfected security interest, would lead to subordination.

The scenario involves a purchase money security interest (PMSI) in inventory. Under West Virginia’s Article 9 of the Uniform Commercial Code, a secured party with a PMSI in inventory must satisfy specific perfection requirements to maintain priority over other creditors. Specifically, the secured party must file a financing statement and the debtor must receive possession of the collateral. Crucially, for inventory, the secured party must also notify any existing secured parties who have filed financing statements covering the same goods. This notification must occur before the debtor receives possession of the inventory. The notification must state that the secured party expects to acquire a PMSI in inventory of the debtor and must describe the inventory. In this case, Apex Financial secured a PMSI in inventory. Apex filed a financing statement on March 1st and the debtor received possession of the inventory on March 5th. However, Apex failed to notify any existing secured parties before the debtor received possession. Zenith Bank had a prior perfected security interest in all of the debtor’s inventory. Since Apex did not provide the required notification to Zenith Bank before the debtor received possession of the inventory, Apex’s PMSI in the inventory is subordinate to Zenith Bank’s prior perfected security interest. Therefore, Zenith Bank’s security interest has priority.

In West Virginia, under Article 9 of the Uniform Commercial Code, a secured party’s rights upon a debtor’s default are primarily governed by Part 6 of the statute. Specifically, after default, the secured party may reduce a claim to judgment, then go to the relevant court and have the chattel levied upon and sold. Alternatively, and more commonly, the secured party can repossess the collateral without judicial process if it can be done without breach of the peace. The UCC defines “breach of the peace” broadly, and it includes any conduct that violates criminal law or that is likely to provoke violence. If the secured party repossesses the collateral, they must then dispose of it in a commercially reasonable manner. This includes selling, leasing, or otherwise disposing of the collateral. The proceeds from the disposition are applied first to the expenses of repossession and disposition, then to the satisfaction of the secured obligation. Any surplus goes to the debtor or subordinate secured parties, and any deficiency is typically owed by the debtor. If the secured party intends to retain the collateral in satisfaction of the debt, they must send a proposal to the debtor and any other secured party who has filed a financing statement against the collateral or is known to have an interest. If the debtor or another secured party objects within a specified period, the secured party must sell the collateral. The question tests the understanding of the procedural steps and limitations on a secured party’s actions post-default, specifically concerning the method of obtaining possession of collateral. The scenario describes a situation where the secured party is attempting to repossess a vehicle by entering the debtor’s locked garage without permission. Such an action would likely constitute a breach of the peace under West Virginia law, as it involves unauthorized entry and potential trespass, which could provoke a violent reaction from the debtor or create a disturbance. Therefore, the secured party would be prohibited from taking possession in this manner. The proper recourse would be to seek judicial intervention to obtain possession.

The scenario involves a dispute over the priority of security interests in a piece of equipment. First, we must determine the perfection status of each security interest. West Virginia Code § 46-9-301 states that an unperfected security interest is subordinate to the rights of a person entitled to priority under West Virginia Code § 46-9-317. A security interest is perfected when it has attached and when a financing statement has been filed or possession or control has been obtained, as specified in West Virginia Code § 46-9-308. The security interest granted to Appalachian Bank attached on March 15, 2023, when it was supported by value, the debtor had rights in the collateral, and the security agreement was authenticated. Appalachian Bank filed a financing statement on March 20, 2023. Under West Virginia Code § 46-9-310, filing a financing statement is generally the method of perfection for goods. Therefore, Appalachian Bank’s security interest was perfected on March 20, 2023. The security interest granted to Kanawha Capital attached on April 1, 2023. Kanawha Capital obtained possession of the collateral on April 10, 2023. Possession perfects a security interest in goods under West Virginia Code § 46-9-312(a). Thus, Kanawha Capital’s security interest was perfected on April 10, 2023. When determining priority between two perfected security interests in the same collateral, West Virginia Code § 46-9-322(a)(1) states that the first to file or perfect has priority. Appalachian Bank perfected its security interest on March 20, 2023, while Kanawha Capital perfected its security interest on April 10, 2023. Since Appalachian Bank perfected its interest earlier, it has priority over Kanawha Capital.

The scenario involves a security interest in inventory held by a West Virginia-based retailer, Appalachian Outfitters. The debtor, Appalachian Outfitters, has granted a purchase money security interest (PMSI) in its entire inventory to Creditor A. Creditor A properly files a financing statement in West Virginia on January 15th. Subsequently, Creditor B, a bank, provides a line of credit to Appalachian Outfitters and takes a non-PMSI security interest in the same inventory, filing its financing statement in West Virginia on February 1st. The core issue is the priority between these two secured parties. Under West Virginia Code § 46-9-324, a perfected PMSI in inventory has priority over a conflicting security interest in the same inventory. This priority is conditioned on several requirements: the PMSI must be perfected when the debtor receives possession of the inventory, the conflicting secured party must have knowledge of the PMSI, and the PMSI must be perfected within a specific timeframe. In this case, Creditor A’s PMSI was perfected on January 15th, and Creditor B’s conflicting security interest was perfected on February 1st. Since Creditor A perfected its PMSI before Creditor B perfected its non-PMSI, and assuming Creditor B had knowledge of the PMSI at the time it extended credit or filed its financing statement, Creditor A’s PMSI generally takes priority. The UCC § 9-324(b) specifically addresses PMSI in inventory, requiring that the PMSI holder give an appropriate notification to other secured parties who have filed or are known to have a security interest in the collateral. If Creditor A provided such notification to Creditor B prior to Creditor B filing its financing statement, Creditor A’s priority is reinforced. However, even without explicit notification to Creditor B, the general rule for PMSI in inventory is that it takes priority over a prior perfected non-PMSI secured party if the PMSI is perfected within 20 days of the debtor receiving possession. In this scenario, the filing dates establish a clear temporal order. Creditor A’s earlier perfection of its PMSI is the determinative factor for priority over Creditor B’s later-perfected non-PMSI security interest, provided all other PMSI requirements are met, which are presumed in the absence of contrary information. Therefore, Creditor A has priority.

In West Virginia, under Article 9 of the Uniform Commercial Code, a purchase money security interest (PMSI) in consumer goods generally attains automatic perfection upon attachment. However, this automatic perfection is subject to specific exceptions. One such exception relates to the perfection of a PMSI in inventory. While a PMSI in inventory is perfected by filing, the UCC also addresses situations where a buyer of goods in the ordinary course of business takes free of a security interest created by the seller. This protection extends even if the security interest is perfected. The core issue here is whether a buyer of inventory from a dealer, who themselves has a PMSI in that inventory, takes free of that PMSI when the PMSI holder’s interest is perfected. Under UCC § 9-320, a buyer in ordinary course of business takes goods free of a security interest created by their seller even if the security interest is perfected, unless the buyer knows the sale is not in the ordinary course of business. This protection is crucial for the smooth functioning of commerce, allowing businesses to acquire inventory without the constant need to investigate the perfection status of every security interest held by their suppliers. Therefore, the holder of a PMSI in inventory, even if perfected, cannot enforce that security interest against a buyer in the ordinary course of business from the inventory debtor. The protection afforded to the buyer in ordinary course is a fundamental tenet of Article 9, designed to facilitate commercial transactions.

Under West Virginia’s Article 9 of the Uniform Commercial Code, a purchase-money security interest (PMSI) in inventory has specific perfection requirements. For a PMSI in inventory to have priority over a prior perfected security interest in the same collateral, the secured party must meet several conditions. First, the security interest must be a purchase-money security interest, meaning the collateral was acquired by the debtor with the secured party’s financing. Second, the secured party must have a valid security agreement that attaches to the inventory. Third, the secured party must file a financing statement before or within a specific period after the debtor receives possession of the inventory. West Virginia follows the typical UCC approach where filing is generally required for PMSI in inventory to gain priority over other secured creditors who have a prior perfected security interest in after-acquired inventory. The filing must also notify potential creditors that the inventory is subject to a PMSI. This notification is crucial for establishing priority. The UCC § 9-324(b) outlines the requirements for PMSI priority in inventory, which involves not only perfection by filing but also notification to other secured parties who have previously filed financing statements covering the same type of collateral. Specifically, the PMSI lender must ensure that the debtor receives possession of the inventory and that the PMSI lender’s financing statement is filed and that any other secured party with a prior perfected security interest in the same inventory receives notification of the PMSI. This notification must occur before the debtor receives possession of the inventory. Therefore, the critical step for establishing priority over a prior perfected security interest in inventory is filing the financing statement and providing the requisite notification to the prior secured party before the debtor receives possession.

The scenario involves a security interest in inventory and the priority of a purchase money security interest (PMSI) against a previously perfected security interest. In West Virginia, as under the Uniform Commercial Code (UCC) Article 9, a PMSI in inventory generally takes priority over a prior perfected security interest in the same collateral if certain conditions are met. For inventory, these conditions include that the PMSI holder must have perfected its security interest at the time the debtor received possession of the inventory and must have given the requisite notification to any prior secured party. The notification requirement, as per UCC § 9-324(b), mandates that the PMSI holder send an authenticated notification to any secured party that previously filed a financing statement covering the same items or proceeds of inventory. This notification must state that the PMSI holder expects to acquire a PMSI in inventory of the type the debtor acquires, and must be sent before the debtor receives possession of the inventory. In this case, Aurora Corp. perfected its security interest in all of Dynamo Corp.’s present and future inventory on January 15, 2023. Zenith Corp. then acquired a PMSI in new inventory for Dynamo Corp. and perfected its interest on February 1, 2023. Zenith Corp. sent its authenticated notification to Aurora Corp. on January 20, 2023, which was before Dynamo Corp. received possession of the new inventory from Zenith Corp. Therefore, Zenith Corp.’s PMSI in the inventory has priority over Aurora Corp.’s earlier perfected security interest. The calculation is conceptual, not numerical, focusing on the timing and notification requirements of UCC § 9-324(b).

The scenario involves a debtor, Appalachian Artisans Guild, and two secured parties, First National Bank of Morgantown and Green Valley Credit Union. Both parties have security interests in the same collateral: a collection of handcrafted furniture. First National Bank of Morgantown filed a financing statement on January 15, 2023, perfecting its security interest. Green Valley Credit Union obtained a security interest on February 1, 2023, and filed its financing statement on February 10, 2023. Under West Virginia’s adoption of UCC Article 9, priority among competing security interests in the same collateral is generally determined by the first to file or first to perfect rule. Since First National Bank of Morgantown filed its financing statement before Green Valley Credit Union, First National Bank of Morgantown has priority. The fact that Green Valley Credit Union’s security interest attached earlier is irrelevant to priority as perfection is the key. The collateral is inventory and fixtures, and while specific rules might apply to fixtures, the primary issue here is the timing of perfection for general inventory. West Virginia Code § 46-9-322(a)(1) states that the first-to-file or first-to-perfect rule governs priority. Therefore, First National Bank of Morgantown, having filed first, holds the senior secured position.

West Virginia’s Article 9 of the Uniform Commercial Code governs secured transactions. When a debtor defaults on a secured obligation, the secured party has rights to repossess and dispose of the collateral. This disposition must be commercially reasonable. The proceeds from the disposition are applied in a specific order: first, to the reasonable expenses of repossession and disposition, including attorney’s fees and legal expenses if provided for in the security agreement and permitted by law. Second, to satisfy the satisfaction of the secured obligation. Third, to the satisfaction of any subordinate security interests or other liens or security interests if there is a written demand for recognition and satisfaction of the interest. Any surplus is returned to the debtor, and any deficiency is typically owed by the debtor. In this scenario, the secured party, Mountaineer Manufacturing, incurred $5,000 in expenses for repossession and sale. The outstanding debt was $50,000. The collateral sold for $40,000. After applying the proceeds to the expenses ($40,000 – $5,000 = $35,000 remaining), the remaining proceeds are applied to the secured obligation. Since $35,000 is less than the $50,000 owed, there is a deficiency. The deficiency amount is calculated as the secured obligation minus the net proceeds from the sale ($50,000 – $35,000 = $15,000). Therefore, the debtor, Appalachian Apparel, owes a deficiency of $15,000.

The scenario involves a secured party, Mountain State Mining Company, and a debtor, Appalachian Aggregate Inc., with collateral being a fleet of specialized excavation vehicles. Mountain State Mining Company properly perfected its security interest in these vehicles by filing a UCC-1 financing statement in West Virginia, the correct jurisdiction for perfection under West Virginia Code § 46-9-301 and § 46-9-307, as the vehicles are equipment used in the debtor’s business. Appalachian Aggregate Inc. subsequently defaults on its loan obligations. Prior to the default, Appalachian Aggregate Inc. entered into a lease agreement for some of these excavation vehicles with a third party, Coal Country Leasing LLC. The lease agreement is structured as a “true lease” and not a disguised security interest, meaning Coal Country Leasing LLC retains ownership of the vehicles. When Mountain State Mining Company seeks to repossess the collateral upon default, it encounters Coal Country Leasing LLC’s claim to the vehicles. Under West Virginia law, specifically West Virginia Code § 46-9-319, a lessee under a true lease is not a buyer in ordinary course of business and does not have rights of a buyer in ordinary course of business. A secured party’s perfected security interest generally has priority over a lessee’s interest in leased goods unless the lease is a disguised security interest and the lessee qualifies for protection. However, the core issue here is the nature of the lease. If it is a true lease, the lessee (Coal Country Leasing LLC) is the owner, and the debtor (Appalachian Aggregate Inc.) merely possessed the goods. Mountain State Mining Company’s security interest attaches to the debtor’s rights in the collateral. Since the debtor had no ownership interest in the vehicles leased under a true lease, Mountain State Mining Company’s security interest cannot attach to the vehicles themselves, but only to the debtor’s leasehold interest. Therefore, Coal Country Leasing LLC, as the true owner of the vehicles, retains superior title against Mountain State Mining Company’s security interest, which could only attach to the debtor’s possessory rights under the lease. The correct answer hinges on the determination that the lease is a true lease, which is a factual determination, but for the purpose of this question, we assume it is a true lease.