The question revolves around the priority of security interests when a debtor grants multiple security interests in the same collateral and subsequently files for bankruptcy. Under Article 9 of the UCC, the general rule for priority is “first in time, first in right,” meaning the first secured party to file a financing statement or perfect its security interest generally has priority. However, Purchase Money Security Interests (PMSIs) have special priority rules. A PMSI in inventory arises when a secured party gives value to enable the debtor to acquire inventory, and the value is in fact used for that purpose. To maintain its superpriority, a PMSI lender in inventory must perfect its interest not only before the debtor receives possession of the inventory but also by filing a financing statement and sending authenticated notification to any secured party who previously filed a financing statement covering the same inventory or after-acquired inventory. In this scenario, Bank A perfected its security interest in all of Debtor Corp’s present and after-acquired inventory by filing a financing statement on January 1st. On February 1st, Lender B provided financing for Debtor Corp to acquire new inventory and properly attached its PMSI in that specific inventory. Lender B then filed a financing statement covering the new inventory on February 15th and sent notice to Bank A on March 1st, after Debtor Corp had already received the inventory. Since Lender B’s perfection of its PMSI occurred after Bank A had already perfected its interest in the same collateral (after-acquired inventory), and Lender B failed to meet the notification requirements *before* the debtor received possession of the inventory, Bank A’s earlier perfected security interest in the after-acquired inventory will generally have priority over Lender B’s PMSI in the subsequently acquired inventory. The notification to Bank A was sent after the debtor received possession, rendering it ineffective for establishing PMSI priority over Bank A’s pre-existing claim on after-acquired inventory. Therefore, Bank A has priority.

The question revolves around the priority of security interests when a debtor grants multiple security interests in the same collateral, and one of those interests is a Purchase Money Security Interest (PMSI). A PMSI grants the secured party a security interest in goods to the extent that the goods are purchased with the proceeds of the security interest. For inventory, a PMSI generally has priority over earlier perfected security interests in the same inventory if certain conditions are met. These conditions, as outlined in UCC § 9-324(b), require that the PMSI holder give notice to any prior secured party who has filed a financing statement covering the inventory. This notice must be given before the debtor receives possession of the inventory. The notice must state that the secured party expects to acquire a PMSI in inventory of the debtor and describe the inventory. In this scenario, Aurora Bank has a perfected security interest in all of Zenith Corp’s inventory. Lumina Finance acquires a PMSI in new inventory Zenith Corp purchases. Lumina Finance files its financing statement and gives the required notice to Aurora Bank *after* Zenith Corp receives possession of the new inventory. Because Lumina Finance failed to provide notice *before* Zenith Corp received possession of the inventory, its PMSI in that inventory will not have priority over Aurora Bank’s earlier perfected security interest. Therefore, Aurora Bank retains its priority.

The core issue here is determining the priority of security interests when one is a purchase money security interest (PMSI) in equipment and the other is a general security interest perfected earlier. Under UCC § 9-324(a), a PMSI in equipment has priority over a conflicting security interest in the same equipment if the PMSI requirements are met. These requirements include: (1) the security interest must be a purchase money security interest; (2) it must be perfected by filing no later than 20 days after the debtor receives possession of the collateral; and (3) the secured party must have knowledge of the earlier perfected security interest. In this scenario, AgriCorp’s security interest is a PMSI in the combine harvester, which is equipment. AgriCorp filed its financing statement on January 15th, which is within 20 days of the debtor receiving possession on January 1st. AgriCorp also had knowledge of FarmLend’s prior perfected security interest. Therefore, AgriCorp’s PMSI will have priority over FarmLend’s earlier perfected security interest in the combine harvester. The calculation is not numerical but conceptual: AgriCorp’s PMSI, properly perfected within the statutory window and with knowledge of the prior interest, defeats the earlier general security interest.

The core issue here revolves around the priority of security interests when a debtor grants multiple security interests in the same collateral, particularly when one of those interests is a Purchase Money Security Interest (PMSI). A PMSI grants the secured party priority over other secured parties if certain conditions are met. For inventory, a PMSI holder must perfect its interest by filing a financing statement and providing notification to any existing secured parties of record before the debtor receives possession of the inventory. In this scenario, Creditor A has a perfected security interest in all of Debtor Corp’s present and after-acquired inventory. Creditor B subsequently sells inventory to Debtor Corp on credit, retaining a PMSI in that specific inventory. Creditor B files a financing statement covering the inventory and sends a notification to Creditor A before Debtor Corp receives the inventory. This notification is crucial for establishing PMSI priority in inventory. Creditor B’s timely filing and notification satisfy the requirements of UCC § 9-324(b) for inventory PMSIs. Therefore, Creditor B’s PMSI will have priority over Creditor A’s earlier perfected security interest in the inventory sold by Creditor B. The value of the inventory sold by Creditor B is \( \$50,000 \). The question asks for the priority of Creditor B’s interest in the inventory it sold. Since Creditor B properly perfected its PMSI in the inventory by filing and notifying Creditor A, its interest takes priority over Creditor A’s blanket lien on all inventory. The amount of the PMSI is \( \$50,000 \).

The core issue here is the priority of security interests when a debtor grants multiple security interests in the same collateral. Under UCC § 9-322, the general rule for priority is “first in time, first in right,” meaning the first secured party to file a financing statement or perfect its security interest generally has priority. However, Purchase Money Security Interests (PMSIs) have special priority rules. A PMSI in inventory grants the secured party priority over prior perfected security interests in the same inventory if certain conditions are met. These conditions, as outlined in UCC § 9-324(b), require that the PMSI holder: (1) perfect its security interest in the inventory when the debtor receives possession of the inventory; (2) file a financing statement covering the inventory before the debtor receives possession of the inventory; and (3) send an authenticated notification to any secured party who previously filed a financing statement covering the inventory or who was known by the PMSI holder to have a security interest in the inventory. The notification must describe the inventory by item or by type and must be sent within 25 days after the security agreement attaches. In this scenario, Lumina Corp. perfected its security interest in all of Aurora Inc.’s present and after-acquired inventory on January 15th. Zenith Corp. later obtained a PMSI in Aurora Inc.’s inventory and perfected it on February 1st. Zenith Corp. also sent the required notification to Lumina Corp. on February 5th, which was within the 25-day window after attachment and described the inventory. Therefore, Zenith Corp.’s PMSI has priority over Lumina Corp.’s earlier perfected security interest in the inventory.

The core issue here is the priority of security interests when a debtor grants multiple security interests in the same collateral, and one of those interests is a Purchase Money Security Interest (PMSI). A PMSI grants the secured party priority over other secured parties in the collateral acquired with the funds or credit provided by the secured party. For inventory, a PMSI holder must meet specific requirements to maintain its superpriority. Under UCC § 9-324(a), a secured party with a PMSI in inventory has priority over a conflicting security interest in the same inventory if, among other things, the PMSI holder gives new value to enable the debtor to acquire the inventory, the debtor receives possession of the inventory, and the PMSI financing statement is filed and provides notice to any other secured party who has filed a financing statement covering the inventory or goods that will become inventory before the filing of the PMSI statement. Crucially, the PMSI holder must also notify any other secured party who has filed a financing statement covering the inventory or goods that will become inventory before the date of the filing of the PMSI statement. This notification must be given before the debtor receives possession of the inventory. In this scenario, Apex Corp’s PMSI in the specialized manufacturing equipment, which is inventory, is perfected by filing on January 15th. However, Apex Corp failed to notify Zenith Bank, which had a prior perfected security interest in all of the debtor’s inventory, before the debtor received possession of the new equipment. Zenith Bank’s prior perfected security interest attached and was perfected on January 10th. Apex Corp’s failure to provide the required notification to Zenith Bank before the debtor received possession of the inventory means Apex Corp loses its PMSI superpriority. Therefore, Zenith Bank, having perfected its security interest first, retains priority over Apex Corp’s PMSI. The correct answer reflects this outcome.

The core issue here is determining the priority of security interests when a debtor grants multiple security interests in the same collateral, and one of those interests is a Purchase Money Security Interest (PMSI). A PMSI grants a secured party a security interest in goods to the extent that the goods are purchased with the proceeds of the security interest. For inventory, a PMSI generally has priority over conflicting security interests in the same inventory if certain conditions are met. The conditions for PMSI priority in inventory under UCC § 9-324(b) are: 1. The PMSI must be perfected when the debtor receives possession of the inventory. 2. The PMSI secured party must give an authenticated notification to any other secured party whose security interest has already been perfected in the same inventory, before the debtor receives possession of the inventory. 3. The notification states that the secured party expects to acquire a PMSI in inventory of the type the debtor acquires, specifying the type. In this scenario, Aurora Bank has a perfected security interest in all of “Debtor’s present and future inventory.” This is a broad, after-acquired property clause. Zenith Finance then acquires a PMSI in specific new inventory delivered to the Debtor. Zenith Finance perfects its PMSI by filing a financing statement on January 15th. The Debtor receives possession of the new inventory on January 20th. Aurora Bank’s security interest attached and was perfected prior to Zenith Finance’s PMSI. For Zenith Finance to have priority over Aurora Bank’s existing perfected security interest in the same inventory, it must satisfy the special PMSI notification requirements for inventory. Zenith Finance filed on January 15th, but the Debtor did not receive possession of the inventory until January 20th. Crucially, Zenith Finance did not provide Aurora Bank with the required notification *before* the Debtor received possession of the inventory. The notification must be given before the debtor receives possession. Since Zenith Finance’s notification would have been given on or after January 20th (as it only filed on the 15th and the debtor received possession on the 20th, and no other notification date is provided, implying it would be after the filing or concurrently with receipt), it fails to meet the prerequisite of notification *before* possession. Therefore, Zenith Finance’s PMSI in the inventory does not have priority over Aurora Bank’s prior perfected security interest. Aurora Bank retains its priority.

The core issue here is the priority of security interests when a debtor grants multiple security interests in the same collateral and one of those interests is a Purchase Money Security Interest (PMSI). A PMSI grants the secured party a security interest in collateral to the extent that the collateral secures the obligation of the debtor to the secured party, where the secured party either: (1) gives value that enables the debtor to acquire rights in or the use of the collateral, or (2) gives value that enables the debtor to use the collateral. For inventory, a PMSI generally has priority over conflicting security interests in the same inventory, including after-acquired inventory, and in identifiable proceeds of the inventory, provided that the PMSI holder perfects its security interest *before* the debtor receives possession of the inventory and, if the collateral is other than inventory or instruments, that the PMSI holder gives an authenticated notification to any secured party whose security interest is perfected in the collateral before the debtor receives possession of the collateral. In this scenario, Stellar Corp. has a perfected security interest in all of Apex Manufacturing’s existing and after-acquired equipment. When Apex acquires new machinery, this machinery constitutes new collateral. Zenith Corp. finances the purchase of this new machinery, thus holding a PMSI in it. Zenith files its financing statement on October 1st, which is before Apex receives possession of the machinery on October 5th. Zenith also sends a notification to Stellar Corp. on October 2nd, which is before Apex receives possession. Therefore, Zenith’s PMSI is perfected and has priority over Stellar’s earlier perfected security interest in after-acquired equipment. Stellar’s security interest attached to the new machinery when Apex acquired rights in it, but Zenith’s PMSI has superpriority due to proper perfection and notification.

The core issue here is the priority of security interests when a debtor grants multiple security interests in the same collateral. Under UCC § 9-322, the general rule for priority is “first in time, first in right,” meaning the first secured party to file a financing statement or perfect its security interest prevails. However, there are exceptions, particularly for Purchase Money Security Interests (PMSIs). A PMSI in inventory generally requires perfection and notification to other secured parties *before* the debtor receives possession of the inventory. In this scenario, Bank A has a perfected security interest in all of the debtor’s existing and after-acquired inventory. Bank B subsequently obtains a PMSI in specific inventory. For Bank B’s PMSI to have priority over Bank A’s earlier perfected security interest in that same inventory, Bank B must have perfected its PMSI by filing and provided notification to Bank A *before* the debtor received possession of the inventory. The facts state Bank B filed its financing statement and notified Bank A *after* the debtor received the inventory. Therefore, Bank B’s PMSI does not have priority over Bank A’s prior perfected security interest in the inventory. Bank A’s security interest, having been perfected first and not being subject to a valid PMSI exception due to the timing of perfection and notification, retains its priority. The value of the collateral is irrelevant to the determination of priority between these two secured parties; it is the timing of perfection and compliance with PMSI notification rules that dictates priority.

The scenario involves a secured party, “Apex Lending,” which has a perfected security interest in “Zenith Corp’s” inventory. Zenith Corp then sells a piece of inventory to “Bargain Buys,” a buyer in the ordinary course of business. Under UCC § 9-320, a buyer in the ordinary course of business takes goods free of a security interest created by its seller even though the security interest is perfected and the buyer knows of its existence. This protection is a fundamental aspect of facilitating commerce by ensuring that buyers in the ordinary course can acquire goods without needing to conduct extensive due diligence into the seller’s financing arrangements. The key is that the sale must be from the inventory of the seller, and the buyer must be acting in the ordinary course of business, meaning they are buying in good faith without knowledge that the sale violates the security agreement. Apex Lending’s security interest, while perfected, is subordinate to the rights of a buyer in the ordinary course of business. Therefore, Apex Lending cannot repossess the inventory from Bargain Buys. The fact that Apex Lending’s security interest was perfected prior to the sale is irrelevant to the buyer’s status as a buyer in ordinary course. The explanation focuses on the statutory protection afforded to buyers in the ordinary course of business under Article 9, which overrides even perfected security interests created by the seller.

The core issue here is determining the priority of competing security interests in a single piece of collateral. Under UCC § 9-322, the general rule for priority is “first in time, first in right,” meaning the first secured party to file a financing statement or perfect its security interest prevails. However, Purchase Money Security Interests (PMSIs) have special priority rules. A PMSI in inventory grants the secured party priority over earlier perfected security interests in the same inventory if certain conditions are met. These conditions, as outlined in UCC § 9-324(b), require that the PMSI holder: (1) perfect its security interest in the inventory before the debtor receives possession of the inventory, and (2) the PMSI holder gives an authenticated notification to any secured party who previously filed a financing statement covering the inventory. In this scenario, Bank A has a perfected security interest in all of Debtor Corp’s present and after-acquired inventory. This perfection occurred on January 1st. On February 1st, Lender B extends new credit to Debtor Corp and takes a security interest in the same inventory, which is also inventory. Lender B’s security interest is a PMSI because the collateral (inventory) was acquired by Debtor Corp with Lender B’s financing. For Lender B’s PMSI to have priority over Bank A’s earlier perfected interest, Lender B must satisfy the requirements of § 9-324(b). Lender B perfected its PMSI on February 15th, which was after Debtor Corp received possession of the inventory. Critically, Lender B also provided an authenticated notification to Bank A on February 10th, informing Bank A of Lender B’s PMSI in the inventory. Since Lender B perfected its PMSI and notified the prior secured party (Bank A) before the debtor received possession of the inventory, Lender B’s PMSI has priority over Bank A’s security interest in the inventory acquired by Debtor Corp after February 10th. The notification requirement is met by the February 10th communication. Therefore, Lender B has priority in the inventory acquired by Debtor Corp after the notification.

The core issue here is the priority of security interests when a debtor grants multiple security interests in the same collateral, and one of those interests is a Purchase Money Security Interest (PMSI). A PMSI grants a secured party a security interest in collateral to the extent that the collateral secures the obligation of the debtor for which the security interest is given. This obligation is typically the purchase price of the collateral or a loan to enable the debtor to purchase the collateral. For inventory, a PMSI generally has priority over a conflicting security interest in the same inventory, provided that the PMSI is perfected when the debtor receives possession of the inventory and any other secured party that has perfected a security interest in the inventory has received notification of the PMSI. The notification requirement is crucial for inventory PMSIs to achieve superpriority. Without proper notification to the prior secured party (in this case, Apex Lending), the PMSI would generally be subordinate to the earlier perfected security interest under the general priority rules of UCC § 9-322. In this scenario, Apex Lending perfected its security interest in all of the debtor’s inventory on January 1st. Zenith Capital then obtained a PMSI in the same inventory on February 1st. Zenith Capital filed its financing statement on February 1st, perfecting its interest. However, the critical element for PMSI superpriority in inventory is the notification to prior secured parties. Zenith Capital failed to notify Apex Lending of its PMSI before the debtor received possession of the inventory. Therefore, Zenith Capital’s PMSI does not gain superpriority over Apex Lending’s earlier perfected security interest. Under UCC § 9-324(a), a PMSI in inventory has priority over a conflicting security interest in the same inventory if the PMSI holder perfects before the debtor receives possession of the inventory and gives notification to any other secured party who has perfected a security interest in the inventory. Since notification was not provided, Zenith Capital’s interest is subject to Apex Lending’s prior perfected security interest. Consequently, Apex Lending has priority.

The scenario involves a secured party, “FinCorp,” lending money to a debtor, “Artisan Goods,” secured by Artisan Goods’ inventory. FinCorp properly files a UCC-1 financing statement covering all inventory. Subsequently, Artisan Goods purchases new inventory on credit from “Material Suppliers Inc.” (MSI), who does not file a financing statement. Artisan Goods defaults on its obligations to both FinCorp and MSI. The core issue is the priority between FinCorp and MSI. FinCorp has a perfected security interest in the inventory by filing. MSI, by not filing a financing statement and not having possession of the collateral, has an unperfected security interest. Under Article 9 of the UCC, a perfected security interest generally has priority over an unperfected security interest. Specifically, UCC § 9-317(a)(2) states that an unperfected security interest is subordinate to the rights of a person that becomes a secured party and gives value and receives delivery of the collateral without knowledge of the security interest or its enforcement. However, this exception is not applicable here as MSI did not receive delivery of the collateral. More importantly, UCC § 9-317(a)(1) states that an unperfected security interest is subordinate to the rights of a buyer of collateral or a lessee of goods, other than a secured party, that receives delivery of the collateral without knowledge of the security interest and for value. This is also not directly applicable as MSI is a secured party. The most relevant rule is UCC § 9-322(a)(2), which establishes that if a security interest is perfected but not by filing or possession, it has priority over another security interest that is perfected only by another method. However, the primary rule for determining priority between two perfected security interests is generally the order of filing or perfection, as per UCC § 9-322(a)(1). For unperfected security interests, the rule is that they are generally subordinate to perfected security interests. In this case, FinCorp’s security interest is perfected through filing. MSI’s security interest, while attached, is unperfected because it did not file a financing statement. Therefore, FinCorp’s perfected security interest takes priority over MSI’s unperfected security interest. FinCorp can enforce its security interest against the inventory, including the newly acquired inventory, to satisfy its debt. MSI would be an unsecured creditor with respect to the collateral unless they can establish a purchase money security interest (PMSI) and meet the specific requirements for PMSI perfection and priority, which they failed to do by not filing. Even if MSI had a PMSI, they would still need to file to gain priority over FinCorp’s prior perfected security interest in after-acquired inventory, unless FinCorp’s security agreement explicitly excluded after-acquired inventory, which is not indicated. The correct answer is that FinCorp’s perfected security interest has priority over MSI’s unperfected security interest.

The core issue here is determining the priority of security interests when one is a purchase money security interest (PMSI) in inventory and the other is a general-term security interest perfected by filing. Under UCC § 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: (1) the PMSI is perfected when the debtor receives possession of the inventory; (2) the PMSI secured party gives an authenticated notification to the holder of the conflicting security interest before the debtor receives possession of the inventory; and (3) the notification states that the debtor has acquired or will acquire inventory on which the holder of the conflicting security interest has or will acquire a security interest. In this scenario, Aurora Bank perfected its security interest in all of Zenith Corp’s inventory on January 1st. On February 1st, Stellar Finance extended credit to Zenith Corp for a new inventory purchase and properly perfected its PMSI in that specific inventory. Stellar Finance also sent a notification to Aurora Bank on February 1st, stating that Zenith Corp had acquired or would acquire inventory subject to Stellar Finance’s security interest. The critical point is that Stellar Finance provided notice to Aurora Bank *before* Zenith Corp received possession of the new inventory. Therefore, Stellar Finance’s PMSI in the new inventory takes priority over Aurora Bank’s earlier-filed general security interest. The notification requirement is satisfied by the statement that the debtor “has acquired or will acquire” inventory.

The scenario involves a secured party, “Astro Dynamics,” who has a security interest in “all present and future inventory” of a debtor, “Stellar Components Inc.” This language creates a security interest that attaches to inventory acquired by Stellar Components Inc. after the initial security agreement. This is established through an after-acquired property clause, which is generally valid under UCC § 9-204(a) for inventory. Astro Dynamics properly filed a financing statement covering inventory. Subsequently, “Galactic Bank” also extended credit to Stellar Components Inc. and obtained a security interest in “all present and future accounts receivable.” Galactic Bank also filed a financing statement covering accounts receivable. Stellar Components Inc. then sold a piece of equipment, which was not inventory or accounts receivable, to “Cosmic Traders” on an installment contract, creating chattel paper. Stellar Components Inc. then assigned this chattel paper to “Nebula Finance” as security for a new loan. Nebula Finance took possession of the chattel paper. The core issue is the priority of security interests in the chattel paper. Astro Dynamics’ security interest in “all present and future inventory” does not extend to chattel paper that arises from the sale of equipment, as equipment is a distinct category of collateral from inventory under Article 9. Therefore, Astro Dynamics has no claim to the chattel paper. Galactic Bank’s security interest is in “all present and future accounts receivable.” While chattel paper can sometimes be considered a form of account, the UCC specifically defines chattel paper as a record or records that evidence both a monetary obligation and a security interest in specific goods (UCC § 9-102(a)(11)). When chattel paper is taken as collateral, it is typically treated as a separate category of collateral. Nebula Finance perfected its security interest in the chattel paper by taking possession of it, which is a valid method of perfection for chattel paper under UCC § 9-313(a). Since Astro Dynamics’ security interest does not extend to the chattel paper and Nebula Finance has a perfected security interest in the chattel paper, Nebula Finance has priority over any unperfected security interest in the chattel paper. Galactic Bank’s security interest, while potentially attaching to accounts receivable, does not have priority over Nebula Finance’s perfected security interest in the chattel paper, as Nebula Finance perfected by possession. Therefore, Nebula Finance has the superior claim to the chattel paper.

The core issue here is the priority of security interests when a debtor grants multiple security interests in the same collateral and a subsequent purchase money security interest (PMSI) is involved. The debtor, LuminaTech, granted a security interest in its entire inventory to Capital Bank. Capital Bank properly perfected its security interest by filing a financing statement. Subsequently, LuminaTech acquired new inventory on credit from Innovate Solutions, which retained a PMSI in that specific inventory. For Innovate Solutions’ PMSI to have priority over Capital Bank’s earlier perfected security interest in the same inventory, Innovate Solutions must satisfy the requirements of UCC § 9-324. This includes: (1) perfecting its security interest in the inventory before the debtor receives possession of the inventory; (2) notifying Capital Bank in writing of its PMSI; and (3) the notification must be sent before LuminaTech receives possession of the inventory. The notification must also specify that LuminaTech is acquiring inventory, describing the inventory and the secured party. In this scenario, Innovate Solutions perfected its PMSI by filing a financing statement before LuminaTech received the inventory. However, it failed to send the required written notification to Capital Bank. Therefore, Innovate Solutions’ PMSI does not have superpriority over Capital Bank’s previously perfected security interest in the inventory. Under UCC § 9-322(a)(1), Capital Bank, having perfected its security interest first, has priority. The value of the collateral is \( \$150,000 \). Capital Bank’s perfected security interest is \( \$100,000 \). Innovate Solutions’ PMSI is \( \$50,000 \). Since Capital Bank has priority, it is entitled to recover its full \( \$100,000 \) from the \( \$150,000 \) in inventory. The remaining \( \$50,000 \) would then be available to satisfy Innovate Solutions’ claim. Thus, Capital Bank will recover \( \$100,000 \).

The core issue here is the priority of security interests when a debtor grants multiple security interests in the same collateral, and one of those interests is a Purchase Money Security Interest (PMSI). A PMSI grants the secured party priority over other secured parties in the collateral acquired by the debtor with the purchase money. For inventory, UCC § 9-324(b) provides specific rules for PMSI holders. To maintain priority, the PMSI secured party must satisfy several conditions: (1) the PMSI must be perfected when the debtor receives possession of the inventory; (2) the PMSI secured party must give an authenticated notification to any other secured party whose security interest has already been perfected in the same inventory (or its proceeds) before the debtor receives possession of the inventory; and (3) the notification must state that the secured party expects to acquire a PMSI in inventory of the debtor, describing the inventory by item or type. In this scenario, PetroCorp’s security interest attached and was perfected first. Then, AgriFin secured a PMSI in the farm equipment inventory. AgriFin filed its financing statement on March 1st and delivered the equipment on March 5th. PetroCorp’s interest was already perfected. AgriFin’s failure to provide PetroCorp with the required notification *before* the debtor received possession of the inventory means AgriFin’s PMSI priority over PetroCorp’s pre-existing perfected security interest is lost. UCC § 9-324(b)(2) explicitly requires this notification to be given before the debtor receives possession. Therefore, PetroCorp, having perfected its security interest first and without notice of AgriFin’s PMSI under the specific inventory rules, retains priority. AgriFin’s subsequent filing on March 10th, after the debtor already possessed the inventory, does not cure the defect in providing the required notification.

The core issue here is determining the priority of competing security interests in a single piece of collateral. Under UCC § 9-322, the general rule for priority is “first in time, first in right,” meaning the first secured party to file a financing statement or perfect its security interest prevails. However, Purchase Money Security Interests (PMSIs) have special priority rules. A PMSI in inventory grants the secured party priority over earlier perfected security interests in the same inventory if certain conditions are met. These conditions, as outlined in UCC § 9-324(b), require that the PMSI holder: (1) perfect its security interest in the inventory before the debtor receives possession of the inventory, and (2) give authenticated notification to any prior secured party of the inventory that the PMSI holder expects to take possession of the inventory, and that notification must be received by the prior secured party within five years before the debtor receives possession of the inventory. In this scenario, Apex Bank perfected its security interest in all of Beta Corp’s present and after-acquired inventory on January 1st. Gamma Finance then acquired a PMSI in Beta Corp’s inventory on March 1st. For Gamma Finance to have priority, it must have perfected its PMSI and provided the required notification to Apex Bank. The problem states Gamma Finance perfected its PMSI on March 1st. The critical missing piece for Gamma Finance to gain priority over Apex Bank’s earlier perfected security interest in the same inventory is the notification requirement. Without evidence that Gamma Finance provided the required authenticated notification to Apex Bank within the specified five-year window before Beta Corp received possession of the inventory, Gamma Finance’s PMSI will not have priority over Apex Bank’s earlier perfected security interest. Therefore, Apex Bank retains priority.

The scenario describes a situation where a secured party, “AeroCorp,” has a security interest in “Zephyr Ltd.’s” inventory. Zephyr Ltd. then sells a piece of inventory to “Nimbus Aviation,” a buyer in the ordinary course of business. Under UCC § 9-320, a buyer in the ordinary course of business takes free of a security interest created by its seller even though the security interest is perfected and the buyer knows of its existence, unless the buyer knows that the sale is in violation of the security agreement. Here, Nimbus Aviation is a buyer in the ordinary course of business because it purchased inventory in good faith, without knowledge that the sale to it was in violation of AeroCorp’s security interest, and in the ordinary course of business from a person in the business of selling goods of that kind. Therefore, Nimbus Aviation takes the inventory free of AeroCorp’s security interest. AeroCorp’s recourse would be against Zephyr Ltd. for breach of the security agreement. The question asks about the status of Nimbus Aviation’s ownership of the collateral. Since Nimbus is a buyer in the ordinary course of business, it takes the collateral free of AeroCorp’s perfected security interest.

The core issue here is the priority of security interests when a debtor grants multiple security interests in the same collateral and a purchase money security interest (PMSI) is involved. Under UCC § 9-324, a PMSI in inventory has priority over a conflicting security interest in the same inventory if certain conditions are met. These conditions include: (1) the PMSI is perfected when the debtor receives possession of the inventory; (2) the secured party gives an authenticated notification to any holder of a conflicting security interest on file or known to the secured party before the debtor receives possession of the inventory; and (3) the notification states that the secured party expects to acquire a PMSI in inventory of a described type. In this scenario, Apex Bank has a perfected security interest in all of “Debtor’s present and future inventory.” This is a general, after-acquired property clause. CrediCorp then acquires a PMSI in specific inventory. For CrediCorp’s PMSI to have priority over Apex Bank’s earlier perfected security interest, CrediCorp must satisfy the notification requirements of § 9-324(b). The facts state that CrediCorp perfected its PMSI on January 15th. However, it does not mention any notification being sent to Apex Bank *before* the debtor received possession of the inventory. The notification sent on January 20th, after perfection and likely after the debtor received possession, is too late to establish PMSI priority under § 9-324(b). Therefore, Apex Bank’s earlier perfected security interest has priority. The calculation of priority is conceptual: Apex Bank perfected first. CrediCorp has a PMSI but failed to provide the required notification *prior* to the debtor receiving possession of the inventory. Without this timely notification, the PMSI does not cut ahead of the prior perfected security interest. Thus, Apex Bank retains priority.

The core issue here is the priority of security interests when a debtor grants multiple security interests in the same collateral and the timing of perfection. Secured Party A perfected its security interest in the debtor’s equipment by filing a financing statement on January 15th. Secured Party B, a purchase money secured party (PMSI) in new equipment, attached its security interest on February 1st and filed its financing statement on February 10th. The debtor acquired new equipment on February 5th, which is the subject of Secured Party B’s PMSI. Under UCC § 9-322(a)(1), the general rule for priority is “first in time, first in right,” meaning the first secured party to file a financing statement or perfect its security interest prevails. However, UCC § 9-324 provides special priority rules for purchase money security interests. Specifically, UCC § 9-324(a) states that a PMSI in equipment has priority over a conflicting security interest in the same equipment if the PMSI is perfected by filing no later than 20 days after the debtor receives possession of the collateral. In this scenario, Secured Party B has a PMSI in the new equipment acquired on February 5th. Secured Party B attached its security interest on February 1st and filed its financing statement on February 10th. The 20-day grace period for filing a PMSI in equipment begins when the debtor receives possession of the collateral, which was February 5th. Therefore, Secured Party B’s filing on February 10th is well within the 20-day window. Secured Party A perfected its interest on January 15th. However, Secured Party B’s PMSI, perfected within the statutory grace period for PMSIs in equipment, will have priority over Secured Party A’s earlier perfected security interest in the *new equipment* acquired on February 5th. This priority extends to the collateral covered by the PMSI. Secured Party A’s earlier filing would still have priority over any collateral the debtor possessed *before* February 5th, or any equipment acquired after the PMSI period expired, unless otherwise specified. The question specifically asks about the priority concerning the *new equipment* acquired on February 5th. Therefore, Secured Party B has priority over Secured Party A with respect to the new equipment acquired on February 5th, provided its PMSI requirements are met and it filed within the 20-day window.

The core issue revolves around the priority of security interests when a debtor grants multiple security interests in the same collateral and a subsequent event, such as bankruptcy, triggers a dispute. In this scenario, Secured Party A has a perfected security interest in all of Debtor Corp’s existing and after-acquired inventory. Secured Party B later obtains a purchase money security interest (PMSI) in specific inventory acquired by Debtor Corp. For Secured Party B’s PMSI to have priority over Secured Party A’s prior perfected security interest in after-acquired inventory, Secured Party B must satisfy the specific requirements for PMSI priority under UCC § 9-324. These requirements generally include: (1) the security interest being a PMSI in the collateral; (2) the security interest being perfected when the debtor receives possession of the collateral or within a specified grace period; and (3) if the collateral is inventory, the secured party must give an appropriate notification to any prior secured party before the debtor receives possession of the inventory. In this case, Secured Party A’s interest attached and was perfected first. Secured Party B’s interest is a PMSI in inventory. The critical step for B to gain priority over A is the notification requirement for inventory PMSIs. UCC § 9-324(b) states that a PMSI in inventory has priority over a conflicting security interest in the same inventory if, among other things, the PMSI secured party gives notification to any other secured party who has previously filed a financing statement covering the inventory. This notification must be sent before the debtor receives possession of the inventory. If Secured Party B failed to provide this notification to Secured Party A, then Secured Party A’s prior perfected security interest in after-acquired inventory would retain priority. Therefore, the absence of proper notification by Secured Party B to Secured Party A is the decisive factor determining that Secured Party A maintains priority.

The scenario describes a situation where a secured party (Alpha Bank) has a security interest in inventory. A new creditor, Beta Finance, subsequently acquires a security interest in the same inventory. Alpha Bank’s security interest attached when the debtor acquired rights in the collateral, received value, and a security agreement was in place. Alpha Bank then perfected its security interest by filing a financing statement covering inventory. Beta Finance also attached its security interest and perfected by filing a financing statement. Under UCC § 9-322(a)(1), the general rule for priority is “first in time, first in right,” meaning the first secured party to either file a financing statement or perfect its security interest prevails. In this case, both Alpha Bank and Beta Finance perfected by filing. Alpha Bank filed its financing statement on January 15th, and Beta Finance filed on February 10th. Therefore, Alpha Bank’s prior filing establishes its priority over Beta Finance’s security interest in the inventory. This priority extends to after-acquired inventory under the terms of Alpha Bank’s security agreement, assuming it contains an after-acquired property clause, which is standard for inventory financing. The question hinges on the priority established by the timing of perfection.

The core issue here is determining the priority of security interests when a debtor grants multiple security interests in the same collateral, and one of those interests is a Purchase Money Security Interest (PMSI). Under UCC § 9-324, a PMSI in inventory has priority over a conflicting security interest in the same inventory if certain conditions are met. These conditions include: (1) the PMSI is perfected when the debtor receives possession of the inventory; (2) the PMSI secured party gives an authenticated notification to any holder of a conflicting security interest on record; and (3) the notification is sent within the twenty-five days before the debtor receives possession of the inventory. In this scenario, Apex Bank perfected its security interest in all of “Debtor Corp’s” inventory on January 1st. Zenith Finance acquired a PMSI in new inventory delivered on February 15th. Zenith Finance perfected its PMSI on February 15th, the same day the inventory arrived. Crucially, Zenith Finance did not notify Apex Bank of its PMSI before the debtor received possession. Therefore, Zenith Finance’s PMSI, despite being a PMSI, does not have priority over Apex Bank’s earlier perfected security interest because the notification requirement under § 9-324(b) was not met. Apex Bank’s security interest, having been perfected first, maintains its priority.

The core issue here is the priority of security interests when a debtor grants multiple security interests in the same collateral, and one of those interests is a Purchase Money Security Interest (PMSI). A PMSI grants the secured party a security interest in collateral to the extent that the collateral secures the obligation of the debtor to the secured party, where the secured party either: (1) gives value that enables the debtor to acquire rights in or the use of the collateral, or (2) gives value that enables the debtor to use the collateral. For inventory, a PMSI generally has priority over conflicting security interests in the same inventory, including after-acquired inventory, if certain conditions are met. These conditions, as per UCC § 9-324(b), require that the PMSI holder give new value, that the debtor receive possession of the inventory in ordinary course of business, and that the financing statement covering the inventory is filed and the secured party notifies any other secured party who has filed a financing statement covering the same or substantially similar inventory or who is known by the secured party to have an interest in the collateral. The notification must be given before the debtor receives possession of the inventory. In this scenario, Apex Bank filed a financing statement covering all of Zenith Corp’s inventory on January 1st. On February 1st, Creditor Corp advanced funds to Zenith Corp to acquire new inventory and properly perfected its PMSI in that inventory. Creditor Corp also sent a notification to Apex Bank on January 25th, before Zenith received the inventory on February 5th. Because Creditor Corp met all the requirements for PMSI priority in inventory, including filing, providing new value, ensuring debtor possession, and providing the required notification to Apex Bank before Zenith received the inventory, Creditor Corp’s PMSI will have priority over Apex Bank’s earlier-filed general security interest in Zenith’s inventory. Therefore, Creditor Corp’s security interest in the inventory acquired on February 5th has priority.

The core issue here is the priority of security interests when a debtor grants multiple security interests in the same collateral, and one of those interests is a Purchase Money Security Interest (PMSI). A PMSI grants the secured party priority over other secured parties in the collateral acquired by the debtor with the purchase money. For inventory, UCC § 9-324(b) outlines specific requirements for a PMSI holder to maintain priority over a previously perfected security interest in after-acquired inventory. These requirements include: (1) the PMSI must be perfected when the debtor receives possession of the inventory; and (2) the PMSI secured party must give an authenticated notification to any previously perfected secured party whose security interest covers the inventory before the debtor receives possession of the inventory. In this scenario, Lumina Corp. perfected its security interest in all of Apex Corp.’s inventory, including after-acquired inventory, on January 15th. Zenith Corp. later obtained a PMSI in specific inventory and perfected it on February 1st. However, Zenith Corp. failed to provide the required notification to Lumina Corp. before Apex Corp. received possession of the inventory subject to Zenith’s PMSI. Therefore, Zenith Corp.’s PMSI in that inventory does not take priority over Lumina Corp.’s prior perfected security interest. Lumina Corp.’s initial perfection on January 15th established its priority in all inventory, including after-acquired inventory, unless a specific exception applies. The PMSI exception for inventory requires timely notification, which was not provided by Zenith. Consequently, Lumina Corp. retains its priority.

The scenario involves a debtor granting a security interest in its inventory and after-acquired equipment to Secured Party A. Secured Party A properly files a financing statement covering “all inventory and equipment, now owned or hereafter acquired.” Subsequently, the debtor acquires a new piece of specialized manufacturing equipment. Before Secured Party A can amend its filing to specifically list this new equipment, Secured Party B files a financing statement covering “all machinery and equipment owned by the debtor.” The core issue is the priority between Secured Party A and Secured Party B concerning the newly acquired equipment. Article 9 of the UCC establishes a general rule of first-to-file or first-to-perfect for priority. However, Secured Party A’s initial filing was broad enough to encompass after-acquired equipment. The description “all inventory and equipment, now owned or hereafter acquired” clearly includes the new manufacturing equipment once it is acquired by the debtor and becomes subject to the security agreement. This is because the after-acquired property clause in Secured Party A’s security agreement and financing statement attaches to the collateral when the debtor obtains rights in it. Secured Party B’s filing covers “all machinery and equipment owned by the debtor.” While this description is also broad, Secured Party A’s filing predates Secured Party B’s filing and explicitly covers after-acquired equipment. Therefore, Secured Party A has priority because its security interest attached to the after-acquired equipment at the moment the debtor acquired rights in it, and its earlier filing perfects that interest. The UCC prioritizes the security interest that is perfected first. In this case, Secured Party A’s interest in the after-acquired equipment was perfected by its initial filing, which covered such collateral. Secured Party B’s later filing does not divest Secured Party A of its prior perfected security interest.

The question revolves around the priority of security interests when a debtor grants multiple security interests in the same collateral and subsequently files for bankruptcy. In this scenario, Apex Corp. filed a financing statement for its security interest in all of the debtor’s equipment on January 15th. This filing perfects Apex Corp.’s security interest. Subsequently, Zenith Bank obtained a purchase money security interest (PMSI) in specific equipment and filed its financing statement on February 1st. Under UCC § 9-324, a PMSI in equipment generally has priority over a conflicting security interest if the PMSI is perfected by filing no later than 20 days after the debtor receives possession of the collateral. However, this priority is subject to the general rule of first-to-file or first-to-perfect under UCC § 9-322. Since Apex Corp. filed its financing statement first, it generally has priority. Zenith Bank’s PMSI, while perfected, was filed after Apex Corp.’s initial filing. Therefore, Apex Corp.’s earlier filing gives it priority over Zenith Bank’s PMSI, even though Zenith Bank’s interest is a PMSI, because the PMSI filing did not occur within the statutory window to gain superpriority over the pre-existing perfected security interest. The bankruptcy filing on March 1st does not alter this pre-bankruptcy priority determination. The trustee in bankruptcy generally steps into the shoes of the debtor and is subject to all perfected security interests. Thus, Apex Corp.’s perfected security interest in all equipment, established by its earlier filing, takes precedence over Zenith Bank’s later-perfected PMSI.

The scenario involves a secured party, “Astro Dynamics,” who has a perfected security interest in “all present and future inventory” of a debtor, “Stellar Components Inc.” This security interest was perfected by filing a UCC-1 financing statement on January 15th. Stellar Components then enters into a transaction with “Cosmic Parts Ltd.” where Cosmic Parts agrees to sell specific components to Stellar Components, and simultaneously, Stellar Components grants Cosmic Parts a security interest in those same components to secure the purchase price. This latter transaction creates a Purchase Money Security Interest (PMSI) in inventory for Cosmic Parts. For Cosmic Parts to have priority over Astro Dynamics’ pre-existing security interest in the inventory, it must satisfy the requirements of UCC § 9-324(b). These requirements include: (1) the PMSI in inventory must be perfected when the debtor receives possession of the inventory; and (2) the secured party (Cosmic Parts) must give an authenticated notification to any other secured party (Astro Dynamics) whose previously filed financing statement covers the inventory. The notification must be sent before the debtor receives possession of the inventory, and the financing statement must cover the inventory. In this scenario, Cosmic Parts fails to provide any notification to Astro Dynamics. Therefore, despite having a PMSI, Cosmic Parts’ security interest in the inventory will be subordinate to Astro Dynamics’ perfected security interest. Astro Dynamics’ security interest attached and was perfected on January 15th. Cosmic Parts’ PMSI attached when Stellar Components received the inventory and Cosmic Parts gave value. However, Cosmic Parts failed to perfect its PMSI in a manner that would grant it priority over Astro Dynamics’ earlier perfected interest, specifically by omitting the required notification. Consequently, Astro Dynamics retains priority.

The scenario involves a secured party, Lumina Corp, and a debtor, Apex Manufacturing. Lumina Corp has a perfected security interest in Apex’s existing and after-acquired inventory. Apex then enters into a transaction with a supplier, Zenith Parts, for new raw materials that will become part of Apex’s inventory. Zenith Parts intends to retain a security interest in these raw materials until they are paid. Apex defaults on its obligations to both Lumina Corp and Zenith Parts. To determine the priority between Lumina Corp and Zenith Parts, we must analyze the nature of Zenith Parts’ security interest and its perfection. Zenith Parts is providing raw materials that will become inventory. If Zenith Parts properly retains a security interest in these raw materials and these materials are delivered to Apex, Zenith Parts may have a purchase money security interest (PMSI) in inventory. Under UCC § 9-324(b), a PMSI in inventory has priority over a conflicting security interest in the same inventory if the PMSI holder satisfies certain conditions. These conditions include: 1. The PMSI is perfected when the debtor receives possession of the inventory. 2. The PMSI holder gives an authenticated notification to the holder of the conflicting security interest (Lumina Corp) before the delivery of the inventory. 3. The notification states that the debtor expects to receive inventory from the secured party and describes the inventory. In this scenario, Lumina Corp’s security interest is in “existing and after-acquired inventory.” Zenith Parts is supplying raw materials that will become inventory. If Zenith Parts perfects its security interest in these raw materials and provides the required notification to Lumina Corp *before* Apex receives the raw materials, Zenith Parts’ PMSI will have priority over Lumina Corp’s security interest in those specific raw materials. The question hinges on whether Zenith Parts took the necessary steps to establish and maintain its PMSI priority. Assuming Zenith Parts properly perfected its PMSI and provided the requisite notification to Lumina Corp, its security interest in the raw materials it supplied would take priority over Lumina Corp’s claim to those specific raw materials. The priority extends to the raw materials themselves, and as they are incorporated into finished goods, the priority generally follows the collateral. The calculation is conceptual, not numerical. The priority is determined by the application of UCC § 9-324(b). If Zenith Parts meets the notification and perfection requirements for a PMSI in inventory, its security interest in the raw materials it supplied will prime Lumina Corp’s security interest in Apex’s after-acquired inventory. This is because the PMSI rules are designed to allow suppliers of inventory to secure their financing even when the buyer has a general security interest in all its inventory. The critical element is the proper notification to the prior secured party before the delivery of the inventory.