The scenario involves a purchase money security interest (PMSI) in inventory. Under Colorado Revised Statutes (C.R.S.) § 4-9-312(3), for a PMSI in inventory to have priority over a prior perfected security interest in the same inventory, several conditions must be met. First, the PMSI must be perfected when the debtor receives possession of the inventory. Second, the secured party must give another secured party who has filed a financing statement covering the inventory notice of the PMSI. This notice must be given within five years before the debtor receives possession of the inventory. Third, the notice must state that the secured party expects to acquire a PMSI in inventory of the type described. The question states that “Alpine Equipment Financing” filed its financing statement on March 1st and its PMSI was perfected on March 15th when the debtor received the inventory. “Rocky Mountain Bank” had a prior perfected security interest and filed on February 1st. Alpine Equipment Financing did not notify Rocky Mountain Bank of its intent to acquire a PMSI in the inventory before the debtor received possession. Therefore, Alpine Equipment Financing’s PMSI will not have priority over Rocky Mountain Bank’s prior perfected security interest. The priority date for Alpine Equipment Financing is March 15th, the date of perfection, but it failed to meet the notification requirement for inventory PMSIs. Rocky Mountain Bank’s prior filing on February 1st establishes its priority.

The scenario involves a debtor, Mountain View Farms, located in Colorado, granting a security interest in its farm equipment to Secured Lender Corp. The financing statement was correctly filed in Colorado, which is the relevant jurisdiction for determining perfection of a security interest in equipment located in Colorado. The key issue is the priority of the security interest when the collateral is later moved to a different state. Under UCC § 9-316(a)(2), if a debtor relocates to a jurisdiction other than the one where the financing statement was filed, the security interest remains perfected for a period of four months after the relocation. After this four-month period, the security interest ceases to be perfected unless the secured party files a new financing statement in the new jurisdiction. In this case, Mountain View Farms moved its equipment to Wyoming on January 1st. The financing statement was filed in Colorado. The four-month period would expire on May 1st. If Secured Lender Corp. failed to file a new financing statement in Wyoming by May 1st, its security interest would become unperfected in Wyoming. Subsequently, on June 15th, another creditor, Agricultural Supply Co., which is located in Wyoming, perfects a security interest in the same farm equipment by filing a financing statement in Wyoming. Since Secured Lender Corp.’s perfection lapsed on May 1st, Agricultural Supply Co.’s subsequently perfected security interest would have priority over Secured Lender Corp.’s unperfected security interest in Wyoming. Therefore, Agricultural Supply Co. would have priority.

In Colorado, under UCC Article 9, the perfection of a security interest in deposit accounts is generally achieved by control. Control over a deposit account is established when the secured party becomes the bank’s customer with respect to the deposit account, or when the secured party obtains the right to direct the disposition of the deposit account without further action by the debtor. This is typically accomplished through a “control agreement” between the debtor, the secured party, and the bank where the deposit account is held. Without such control, a security interest in a deposit account remains unperfected, and the secured party would not have priority over lien creditors or a bankruptcy trustee. While filing a financing statement is the primary method of perfection for many types of collateral, it is generally insufficient for deposit accounts, as control is the exclusive method for perfection. The explanation highlights that filing is not the method of perfection for deposit accounts and that control is the exclusive method. The scenario describes a situation where a security interest is granted in a deposit account but no control agreement is in place, and a financing statement is filed. This filing does not perfect the security interest in the deposit account.

The core issue here is determining the priority of security interests when a debtor moves collateral from one state to another, specifically from Colorado to Wyoming, and then a new security interest is granted in Wyoming. Under Colorado Revised Statutes (C.R.S.) § 4-9-316, perfection of a security interest can be maintained for a period after collateral is moved into a jurisdiction different from the one where it was perfected. Specifically, if a security interest is perfected in one jurisdiction and then the collateral is moved into another jurisdiction, the security interest remains perfected in the new jurisdiction for a period of four months or until perfection ceases under the law of the original jurisdiction, whichever occurs first. After this four-month period, the security interest can only be maintained by the secured party if it is perfected in the new jurisdiction. In this scenario, Apex Corp perfected its security interest in the specialized drilling equipment in Colorado. When the equipment was moved to Wyoming, Apex’s perfection in Colorado continued to be effective in Wyoming for four months. During this four-month grace period, if Apex had filed a new financing statement in Wyoming, its perfection would have continued without interruption. However, Apex failed to file in Wyoming within the four-month window. The new security interest granted to Summit Bank in Wyoming was perfected by filing in Wyoming *after* the four-month period expired. Since Apex’s perfection lapsed in Wyoming after the four months, Summit Bank’s subsequently perfected security interest takes priority. Therefore, Summit Bank’s security interest is senior.

The scenario involves a secured party’s rights upon default. In Colorado, following a debtor’s default, a secured party generally has the right to repossess the collateral without judicial process if this can be done without breach of the peace. This is a fundamental right under UCC Article 9, as adopted in Colorado. The secured party can then dispose of the collateral in a commercially reasonable manner. However, the secured party must also account for any surplus proceeds to the debtor and any junior secured parties. If the secured party retains the collateral in satisfaction of the debt, specific notice and consent requirements must be met. The question tests the understanding of the immediate post-default actions available to a secured party in Colorado, focusing on the initial steps after a debtor fails to meet their obligations. The correct option reflects the secured party’s right to take possession of the collateral, which is a prerequisite for subsequent disposition or retention.

In Colorado, 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 to comply with instructions from the secured party directing the disposition of the funds in the deposit account. If a debtor grants a security interest in a deposit account to Secured Party A, and subsequently grants a security interest in the same deposit account to Secured Party B, and both parties have obtained control, the priority is determined by the order in which control was obtained. If Secured Party A obtained control first, its security interest has priority over Secured Party B’s security interest. This principle is fundamental to establishing priority in deposit accounts, as control is the exclusive method of perfection for such collateral.

In Colorado, under Article 9 of the Uniform Commercial Code, the perfection of a security interest in a deposit account is generally achieved by control. Control is established when the secured party is the bank in which the deposit account is maintained, or when the debtor has agreed in writing that the bank will comply with the secured party’s instructions regarding the deposit account. This is outlined in Colorado Revised Statutes (C.R.S.) § 4-9-104. The security agreement itself is a prerequisite for attachment, but perfection requires an additional step, which for deposit accounts is control. Filing a financing statement is not the method for perfecting a security interest in a deposit account, as per C.R.S. § 4-9-312(b)(1). While the secured party may have a security agreement, the critical step for perfection in this specific collateral type is obtaining control. Therefore, a financing statement, even if filed, does not perfect the security interest in the deposit account. The correct method is control, typically demonstrated by a tri-party agreement or the secured party being the depositary bank.

The scenario describes a situation where a secured party, Alpine Outfitters, has a security interest in inventory and accounts receivable of a debtor, Mountain Gear LLC. The perfection of a security interest in inventory generally requires filing a financing statement and taking possession of the collateral. However, under Colorado’s version of UCC Article 9, a security interest in accounts receivable is automatically perfected upon attachment. When a security interest covers both inventory and accounts, and the accounts arise from the sale of that inventory, the secured party’s rights to those accounts are typically established through the initial security agreement and perfection. If Mountain Gear sells inventory to a buyer in the ordinary course of business, that buyer takes the inventory free of Alpine Outfitters’ security interest, as per UCC § 9-320. However, Alpine Outfitters’ security interest in the *proceeds* of the inventory, which includes the accounts receivable generated from those sales, remains perfected. The question asks about the status of Alpine Outfitters’ security interest in the accounts receivable generated from the sale of inventory to a buyer in the ordinary course. Since the security agreement covers accounts and inventory, and accounts are proceeds of inventory, the security interest in the accounts is perfected by the filing related to the inventory. Furthermore, even if the security interest in inventory were somehow unperfected, a security interest in accounts is automatically perfected. Therefore, Alpine Outfitters’ security interest in the accounts receivable is perfected.

In Colorado, under Article 9 of the Uniform Commercial Code, a purchase money security interest (PMSI) in inventory generally requires both attachment and perfection. Attachment occurs when value is given, the debtor has rights in the collateral, and a security agreement exists that describes the collateral. Perfection is typically achieved by filing a financing statement. For inventory, a PMSI holder must also notify any existing secured party of record who has filed a financing statement covering the same inventory before the commencement of the debtor’s possession of the inventory. This notification requirement is crucial for priority. If a secured party has a prior perfected security interest in after-acquired inventory, the PMSI holder’s notification to that prior secured party is a condition precedent to establishing priority over the existing secured party’s interest in the inventory that the debtor acquires after the PMSI is perfected. The notification must be sent before the debtor receives possession of the inventory, and it must be sufficient to enable the existing secured party to identify the PMSI holder. The timing and content of this notification are critical to establishing the PMSI holder’s superior right over the inventory that the debtor subsequently acquires.

The scenario describes a situation where a secured party, “Mountain View Financial,” has a perfected security interest in “Alpine Manufacturing’s” inventory. When Alpine Manufacturing defaults on its loan, Mountain View Financial has the right to repossess the collateral. However, the question focuses on the disposition of the collateral after repossession. Colorado law, specifically under UCC § 9-610, permits a secured party to dispose of the collateral in a commercially reasonable manner. This disposition can include selling, leasing, or otherwise transferring the collateral. The proceeds from this disposition are then applied to the secured debt, expenses of repossession and sale, and any subordinate security interests. The key here is that the secured party has the right to dispose of the collateral, and the proceeds are applied in a specific order. The question probes the understanding of what happens to the collateral after default and repossession, and the process of applying the proceeds from its sale. A commercially reasonable disposition is a core principle. The explanation should clarify that the secured party can sell the inventory, and the revenue generated is used to satisfy the outstanding debt, the costs associated with the repossession and sale, and then any junior secured claims. It’s important to note that the secured party must account for any surplus to the debtor or junior secured parties. The core concept is the secured party’s right to realize on the collateral and the priority of payment from those proceeds.

In Colorado, under Article 9 of the Uniform Commercial Code, the priority of security interests is generally determined by the order of filing or perfection. When a purchase money security interest (PMSI) is involved, specific rules apply to grant it superpriority. 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 must be perfected when the debtor receives possession of the inventory, and the secured party must give an authenticated notification to any holder of a conflicting security interest in that inventory. This notification must state that the secured party expects to acquire a PMSI in inventory of the debtor, including description of the inventory and the debtor’s name. The notification must be sent within a specified timeframe before the debtor receives possession of the inventory. For inventory, the notification requirement is crucial for establishing superpriority. Without proper notification to prior secured parties, the PMSI holder’s priority might be defeated. The UCC § 9-324(b) in Colorado outlines this. Specifically, the notification must be sent within five years before the filing of the financing statement covering the inventory. The explanation does not involve any calculations.

The question pertains to the concept of attachment in Colorado’s secured transactions law, specifically focusing on when a security interest becomes enforceable against the debtor. Attachment, as defined under Colorado Revised Statutes (C.R.S.) § 4-9-203, requires three elements: value given, the debtor having rights in the collateral, and a security agreement authenticated by the debtor that describes the collateral. In this scenario, Alpine Outfitters has provided value by extending a line of credit. The debtor, Summit Gear LLC, clearly has rights in the inventory it possesses and intends to use as collateral. The critical element here is the existence of a security agreement. A security agreement must be authenticated by the debtor and must describe the collateral. The scenario states that Summit Gear LLC provided a written document that clearly identified the inventory as collateral and was signed by its authorized representative. This authenticated security agreement, coupled with value and the debtor’s rights in the collateral, means the security interest has attached. Attachment is the foundational step before perfection, which is concerned with enforceability against third parties. Therefore, the security interest attached when Summit Gear LLC authenticated the security agreement that described the inventory.

This question delves into the concept of a purchase money security interest (PMSI) and its perfection requirements under Colorado’s Uniform Commercial Code (UCC) Article 9. A PMSI arises when a secured party gives value that enables the debtor to acquire rights in or the use of collateral, and that value is in fact used for that purpose. For inventory, perfection of a PMSI requires not only filing a financing statement but also that the PMSI holder give notification in accordance with Colorado Revised Statutes (C.R.S.) § 4-9-324(b) to any secured party whose security interest is perfected and who has filed a financing statement covering the inventory. This notification must be sent before the debtor receives possession of the inventory. Furthermore, the notification must state that the sender has or expects to acquire a PMSI in inventory of the debtor and must describe the inventory. Failure to provide this notification renders the PMSI subordinate to the previously perfected security interest. In this scenario, Apex Bank has a prior perfected security interest in all of Evergreen Corp’s inventory. Greenleaf Solutions attempts to perfect a PMSI in the same inventory. Even though Greenleaf Solutions files a financing statement, their failure to provide the requisite notification to Apex Bank before Evergreen Corp received the inventory means their PMSI is subordinate to Apex Bank’s existing security interest. Therefore, Apex Bank retains priority.

The scenario describes a situation where a secured party, “Mountain Ventures Inc.”, has a security interest in inventory owned by “Alpine Outfitters LLC”. A buyer of this inventory, “Peak Performance Gear”, purchased the goods in the ordinary course of business. Under Colorado’s version of UCC Article 9, specifically CRS § 4-9-320, a buyer in 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. In this case, Alpine Outfitters LLC is the seller, and Mountain Ventures Inc. holds the security interest in the inventory. Peak Performance Gear is the buyer in the ordinary course of business. There is no indication that Peak Performance Gear knew the sale was in violation of the security agreement between Mountain Ventures Inc. and Alpine Outfitters LLC. Therefore, Peak Performance Gear takes the inventory free of Mountain Ventures Inc.’s security interest. This principle is fundamental to facilitating commerce by ensuring that ordinary course buyers can acquire goods without the burden of hidden security interests. The protection afforded to buyers in ordinary course is a key policy behind Article 9, promoting efficient market transactions. The question tests the understanding of this specific exception to the general rule that a perfected security interest follows the collateral. The correct answer hinges on the buyer’s status and knowledge.

The question probes the understanding of how a purchase money security interest (PMSI) in inventory is perfected in Colorado under UCC Article 9, specifically concerning the priority of a prior perfected security interest. A PMSI in inventory requires not only the filing of a financing statement but also notification to any prior secured party who has a perfected security interest in the same collateral. This notification must be sent before the debtor receives possession of the inventory. The purpose of this notification is to inform the prior secured party of the new PMSI, allowing them to re-evaluate their collateral position. Colorado’s UCC § 9-324(b) outlines the requirements for PMSI priority in inventory. For a PMSI in inventory to have priority over a prior perfected security interest in the same inventory, the secured party must have a PMSI in the inventory, the secured party must have perfected its security interest in the inventory when the debtor receives possession of the inventory, and the secured party must have given an authenticated notification to any prior secured party that claims an interest in the inventory. This notification must be sent within a specific timeframe relative to the debtor’s receipt of the inventory. The scenario describes a situation where a prior secured party, “Mountain Capital,” has a perfected security interest in all of “Summit Gear’s” existing and after-acquired inventory. “Alpine Bank” then acquires a PMSI in new inventory supplied to Summit Gear. For Alpine Bank’s PMSI to have priority, it must have perfected its interest and provided notification to Mountain Capital before Summit Gear received the inventory. The question implies that Alpine Bank filed its financing statement, but the critical element for priority over Mountain Capital is the notification. Without timely notification, Alpine Bank’s PMSI will be subordinate to Mountain Capital’s prior perfected security interest. Therefore, the failure to provide the required notification to Mountain Capital before Summit Gear received the inventory means Alpine Bank’s security interest will not have priority over Mountain Capital’s.

In Colorado, under Article 9 of the Uniform Commercial Code, a purchase money security interest (PMSI) in inventory generally requires both attachment and perfection to have priority over other secured parties. Perfection is typically achieved by filing a financing statement. However, for inventory, there is a special rule. A PMSI in inventory is continuously perfected as long as the secured party has possession of the collateral or has filed a financing statement. Furthermore, a secured party with a PMSI in inventory must give an authenticated notification to any other secured party who has filed a financing statement covering the same inventory or who holds a security interest in the same inventory before the debtor receives possession of the inventory. This notification requirement is crucial for maintaining priority. If the secured party with the PMSI in inventory fails to provide this notification to a prior perfected secured party, their PMSI will not have priority over that prior secured party’s interest. Therefore, in this scenario, even though Rocky Mountain Outfitters has a PMSI in the new inventory, their failure to notify the existing secured party, Mountain State Bank, before the debtor received the inventory means their PMSI is subordinate to Mountain State Bank’s previously perfected security interest. The perfection of a PMSI in inventory is not solely dependent on filing; the notification requirement is a critical step for establishing priority against prior perfected security interests in the same collateral.

The scenario describes a situation where a buyer of goods, a Colorado-based electronics retailer named “Circuit Haven,” purchases inventory from a supplier, “ElectroCorp,” located in Texas. Circuit Haven grants ElectroCorp a purchase money security interest (PMSI) in the inventory to secure the payment of the purchase price. To perfect this security interest, ElectroCorp must file a financing statement in accordance with Colorado’s Article 9 of the Uniform Commercial Code. Under CRS § 4-9-301(1), a security interest is unperfected unless it has attached and all applicable requirements for perfection have been satisfied. For inventory, perfection is typically achieved by filing a financing statement in the jurisdiction where the debtor is located. Colorado Revised Statutes (CRS) § 4-9-307(1) states that the location of the debtor determines the proper place for filing for perfection of security interests in goods covered by a certificate of title, but CRS § 4-9-307(2) specifies that for inventory, the debtor’s location is the key. Circuit Haven, the debtor, is located in Colorado. Therefore, ElectroCorp must file its financing statement in Colorado to perfect its security interest in the inventory. Filing in Texas, where the supplier is located, would be incorrect for perfecting a security interest against a Colorado-based debtor’s inventory. A PMSI in inventory requires filing in the debtor’s location, and if the goods are consumer goods, a PMSI generally does not need to be filed for perfection, but this is inventory, not consumer goods. The priority rules in CRS § 4-9-324 are relevant for PMSI holders but do not dictate the initial perfection location.

The core of this question lies in understanding the concept of “after-acquired property” within Colorado’s Article 9 of the Uniform Commercial Code, specifically concerning how a security interest attaches to collateral that a debtor obtains after the initial security agreement is executed. Under CRS § 4-9-204, a security agreement may provide that collateral, whenever acquired, shall secure all obligations covered by the agreement. This means that if a security agreement grants a security interest in “all inventory” of a debtor, that security interest will automatically attach to any new inventory the debtor acquires after the agreement is in place, provided the debtor has rights in that new inventory and the secured party has given value. The perfection of this security interest, typically through filing a financing statement, generally covers after-acquired collateral unless the agreement explicitly excludes it or the collateral is of a type that cannot be covered by an after-acquired property clause (e.g., certain types of commercial tort claims). In this scenario, the security agreement explicitly covers “all equipment, now owned or hereafter acquired.” When Mountain Mining Co. purchases the new drilling rig, it acquires rights in this new equipment. Since the security interest in the original collateral was properly perfected by filing, and the security agreement specifically includes after-acquired equipment, the perfected security interest of First National Bank automatically extends to the new drilling rig upon its acquisition by Mountain Mining Co., assuming no other prior perfected security interest exists on that specific rig. The perfection of the security interest in the new drilling rig is achieved by the initial filing covering after-acquired equipment, not by a new filing for each piece of equipment.

The question concerns the interplay between a perfected security interest in Colorado and the rights of a buyer in the ordinary course of business. Under Colorado Revised Statutes § 4-9-320, a buyer in the ordinary course of business takes free of a security interest created by their 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. In this scenario, “Agri-Growers Cooperative” (Agri-Growers) has a perfected security interest in all of “Farm Fresh Produce Inc.” (Farm Fresh)’s inventory, including its harvested crops. “Valley Distributors LLC” (Valley Distributors) is a buyer in the ordinary course of business. They purchased a specific lot of 100 bushels of premium Colorado-grown corn from Farm Fresh. The security agreement between Agri-Growers and Farm Fresh permits Farm Fresh to sell its inventory in the ordinary course of business. Valley Distributors purchased the corn in good faith and without knowledge that the sale was in violation of the security agreement. Therefore, Valley Distributors takes the corn free of Agri-Growers’ perfected security interest. The key is that the security agreement itself allows for ordinary course sales, and Valley Distributors acted in accordance with the conditions for being a buyer in the ordinary course.

In Colorado, as under the Uniform Commercial Code (UCC) Article 9, the priority of security interests is generally determined by the order of filing a financing statement or possession of the collateral. However, specific rules apply to certain types of collateral and transactions. For purchase money security interests (PMSIs) in inventory, perfection typically requires filing a financing statement and providing notice to other secured parties who have filed against that same type of inventory before the financing statement covering the PMSI collateral is filed. Colorado Revised Statutes (C.R.S.) § 4-9-324(b) addresses PMSIs in inventory. This statute states that a PMSI in inventory has priority over a conflicting security interest in the same inventory if the PMSI holder meets certain perfection requirements. These requirements include filing a financing statement covering the inventory before the debtor receives possession of the inventory, and the PMSI holder must give notification in accordance with C.R.S. § 4-9-320(c) to any secured party that previously filed a financing statement covering the inventory. The notification must be sent before the debtor receives possession of the inventory. Therefore, for a PMSI in inventory to have priority, both timely filing and proper notification to prior filers are essential. Without the proper notice to the prior secured party, the PMSI holder’s claim to the inventory would be subordinate to the earlier perfected security interest.

The core issue in this scenario revolves around the priority of security interests when a buyer in the ordinary course of business purchases collateral from a seller who is in the business of selling goods of that kind. Under Colorado Revised Statutes \(CRS\) § 4-9-320(a), a buyer in the ordinary course of business (BIOC) takes free of a security interest created by the seller, even if the BIOC knows of the security interest, unless the BIOC knows that the sale is in violation of the security agreement. In this case, “Mountain Gear Outfitters” is a merchant that sells outdoor equipment, which is precisely the type of goods that “Alpine Adventures LLC” deals in. Therefore, when Alpine Adventures LLC purchased the specialized climbing harnesses from Mountain Gear Outfitters, it was acting as a BIOC. The security interest held by “Summit Bank” was created by Mountain Gear Outfitters to secure its inventory financing. Since Alpine Adventures LLC purchased the harnesses in the ordinary course of Mountain Gear Outfitters’ business and there is no indication that Alpine Adventures LLC knew the sale was in violation of Summit Bank’s security agreement, Alpine Adventures LLC takes the collateral free and clear of Summit Bank’s security interest. This principle is fundamental to facilitating commerce by ensuring that buyers of inventory can acquire goods without the burden of hidden security interests. The UCC prioritizes the free flow of goods in the marketplace for such transactions.

The scenario describes a situation where a secured party, “Prairie Wind Energy LLC,” has a perfected security interest in collateral owned by “Rocky Mountain Solar Farms Inc.” The collateral includes solar panels, mounting equipment, and related fixtures. Rocky Mountain Solar Farms Inc. then sells some of these solar panels to a third party, “Aspen Power Solutions,” who is unaware of Prairie Wind Energy LLC’s security interest. Under Colorado’s Uniform Commercial Code (UCC) Article 9, a buyer in the ordinary course of business (BIOC) generally takes free of a security interest created by the seller, even if the security interest is perfected. This is a fundamental protection for businesses operating within a particular industry. Aspen Power Solutions, as a purchaser of solar panels from a company that deals in such equipment, is presumed to be a buyer in the ordinary course of business. Therefore, Aspen Power Solutions takes the solar panels free of Prairie Wind Energy LLC’s security interest. This principle is designed to facilitate commerce by ensuring that ordinary course purchasers are not burdened by prior unperfected or even perfected security interests in goods they acquire from a seller engaged in the business of selling those goods. The perfection of Prairie Wind Energy LLC’s interest is relevant to other parties, but not to a BIOC in this context.

The question tests the understanding of the priority rules concerning purchase money security interests (PMSIs) in Colorado, specifically when the collateral is inventory and the secured party has failed to file a financing statement before the debtor receives possession of the collateral. Under Colorado Revised Statutes (C.R.S.) § 4-9-324(a), a PMSI in inventory has priority over a conflicting security interest in the same inventory if the PMSI holder meets certain filing requirements. These requirements include filing a financing statement before the inventory subject to the PMSI is delivered to the debtor and the PMSI holder giving an authenticated notification to any other secured party whose security interest is known to the PMSI holder or who has filed a financing statement covering the inventory. In this scenario, “Acme Capital” failed to file its financing statement before “Boulder Bikes” received the new bicycle inventory. Consequently, Acme Capital cannot satisfy the crucial prerequisite for PMSI priority in inventory under Colorado law. The prior perfected security interest held by “Denver Credit Union” in all of Boulder Bikes’ inventory, which was perfected by filing before Acme Capital’s attempted attachment, will therefore have priority. This means Denver Credit Union’s security interest will be satisfied first from the proceeds of the sale of the inventory.

The scenario describes a situation where a secured party, “Rocky Mountain Manufacturing Inc.” (RMM), has a perfected security interest in inventory owned by “Pioneer Provisions LLC” (Pioneer). Pioneer defaults on its loan. RMM then seeks to repossess and sell the inventory. The key issue is how RMM must proceed under Colorado’s Uniform Commercial Code (UCC) Article 9, specifically concerning the disposition of collateral after default. Colorado Revised Statutes (CRS) § 4-9-610 governs the disposition of collateral. This section requires that every aspect of the disposition, including the method, manner, time, place, and other terms, must be commercially reasonable. CRS § 4-9-607 outlines the secured party’s rights regarding collection and enforcement of accounts and chattel paper. CRS § 4-9-608 addresses the secured party’s liability for disposition of collateral. In this case, RMM must dispose of the repossessed inventory in a commercially reasonable manner. This includes providing proper notice to Pioneer and any other required parties, such as junior secured creditors who have filed financing statements. The sale itself must be conducted in a way that maximizes the value of the collateral. The proceeds from the sale are then applied to the secured debt, expenses of repossession and sale, and any remaining balance is remitted to the debtor or junior secured parties. The question asks about the *primary* obligation of RMM concerning the disposition of the collateral. While RMM has the right to repossess and sell, the overarching legal duty governing this process is to conduct it in a commercially reasonable manner. This principle underpins all actions taken by the secured party after default. The other options represent potential outcomes or specific steps, but not the fundamental legal standard governing the entire disposition process. A commercially reasonable disposition is not merely a procedural step but a substantive requirement that ensures fairness and maximizes recovery for all parties involved. The concept of commercial reasonableness is central to Article 9’s framework for post-default remedies. It is a flexible standard that depends on the specific circumstances of the collateral and the market.

The scenario involves a security interest in inventory. Under Colorado’s Uniform Commercial Code (UCC) Article 9, a buyer of inventory generally takes the inventory free of a security interest created by their seller, even if the security interest is perfected, provided the buyer buys in ordinary course of business. This is a fundamental principle designed to facilitate commerce. The buyer must act in good faith and without knowledge that the sale violates the security agreement. In this case, “Mountain Gear Co.” is purchasing inventory from “Alpine Outfitters Inc.” which is a retailer of outdoor equipment, implying that selling such inventory is part of its ordinary course of business. The security interest held by “Summit Bank” is in “all inventory of debtor, wherever located, and however acquired.” This is a standard after-acquired property clause often seen in inventory financing. However, the UCC provides specific protections for buyers in the ordinary course of business. The perfection of Summit Bank’s security interest, while generally providing priority over other creditors, does not override the buyer in ordinary course exception. Therefore, Mountain Gear Co., as a buyer in the ordinary course of business, takes the inventory free of Summit Bank’s security interest.

The question asks about the implications of a lender’s failure to file a continuation statement for a purchase money security interest (PMSI) in inventory under Colorado’s UCC Article 9. A PMSI in inventory requires specific steps to maintain its priority. Under Colorado Revised Statutes (C.R.S.) § 4-9-312(3), a security interest in inventory has priority over a conflicting security interest in the same inventory if the PMSI holder meets certain notification and filing requirements. Specifically, the PMSI holder must have perfected its security interest when the debtor receives possession of the inventory, and the debtor must receive notification of the PMSI holder’s claim. Perfection of a security interest in inventory is typically achieved by filing a financing statement. Perfection of a security interest generally lasts for five years from the date of filing, as per C.R.S. § 4-9-315(a). To maintain perfection beyond this period, a continuation statement must be filed within the six-month window before the expiration of the five-year period. If a continuation statement is not filed, the security interest becomes unperfected. In this scenario, the lender has a PMSI in inventory and has perfected it. However, they fail to file a continuation statement before the five-year expiration. This means their perfection lapses. Once unperfected, the lender’s security interest is subordinate to any buyer of the inventory that takes possession after the perfection lapses, assuming the buyer is not aware of the unperfected security interest and gives value. Furthermore, other secured parties who perfect their interests after the original perfection lapses would generally have priority over the now-unperfected PMSI holder. The critical point is that the failure to file the continuation statement causes the lender to lose their perfected status, and consequently, their priority against subsequent purchasers and perfected secured parties. The lender’s security interest, while still existing between the parties, is no longer effective against third parties who have rights in the collateral. The question probes the consequence of this lapse on the lender’s ability to assert their security interest against new claims arising after the perfection expires.

The scenario involves a dispute over collateral priority between two secured parties. Aurora Manufacturing, Inc. (AMI) initially perfected its security interest in all of “Company X’s” inventory and equipment by filing a financing statement in Colorado on January 15, 2023. Subsequently, Denver Bank loaned additional funds to Company X and perfected its security interest in the same collateral by filing a financing statement in Colorado on March 10, 2023. Colorado’s UCC Article 9, specifically CRS § 4-9-322, governs the priority of security interests. This section establishes that, generally, the first secured party to file a financing statement or perfect its security interest has priority. In this case, AMI’s earlier filing on January 15, 2023, gave it priority over Denver Bank’s later filing on March 10, 2023, assuming both security interests attached and were properly perfected. The fact that Denver Bank’s loan was for additional funds does not alter the priority established by the initial filing date. Therefore, AMI has priority over Denver Bank with respect to the collateral.

The question probes the interplay between a secured party’s rights upon default and the potential for a debtor to retain possession of collateral under Colorado’s Article 9. Specifically, it focuses on the scenario where the secured party has possession of the collateral, and the debtor defaults. Under CRS § 4-9-609, a secured party in possession of collateral may, after default, dispose of it by sale, lease, or other disposition. However, CRS § 4-9-602 clarifies that certain rights of the debtor and obligations of the secured party, including the right to an accounting of the unpaid obligation and the right to redeem the collateral, cannot be waived or varied except as provided in CRS § 4-9-624. The debtor’s right to redeem the collateral is a crucial protection. Redemption requires the debtor to pay all obligations secured by the collateral, plus reasonable expenses incurred by the secured party in retaking, holding, and preparing the collateral for disposition. In this scenario, the secured party has possession of the specialized manufacturing equipment. The debtor has defaulted on the loan. The secured party is contemplating its options. The question asks what is required for the debtor to reclaim the equipment. The debtor must satisfy all outstanding obligations, including the principal balance, accrued interest, and any reasonable expenses incurred by the secured party in relation to the collateral since the default. The secured party cannot simply refuse redemption by claiming it has already begun the disposition process, as the right to redeem generally persists until disposition or a binding contract for disposition has been made. The secured party must also provide an accounting of the unpaid obligations. Therefore, the debtor must tender full payment of the outstanding debt and any permissible expenses.

The scenario involves a debtor, “Aurora Innovations,” a Colorado-based technology firm, that has granted a security interest in its after-acquired inventory to “Boulder Bank.” The security agreement explicitly covers all inventory, whether now owned or hereafter acquired. Aurora Innovations subsequently enters into a financing arrangement with “Denver Capital,” which also takes a security interest in Aurora’s inventory, including any after-acquired inventory. Boulder Bank properly filed its financing statement on January 15, 2023. Denver Capital filed its financing statement on February 1, 2023. On March 10, 2023, Aurora Innovations acquires a new batch of specialized electronic components that constitute inventory. Under Colorado Revised Statutes § 4-9-324, a security interest in after-acquired inventory has priority over a conflicting security interest in the same inventory if the security interest in after-acquired inventory is perfected when the debtor acquires rights in the inventory. When multiple secured parties have perfected security interests in after-acquired inventory, the priority is generally determined by the time of filing or perfection. Boulder Bank perfected its security interest on January 15, 2023, which was prior to Denver Capital’s perfection on February 1, 2023. Therefore, Boulder Bank’s security interest in the newly acquired electronic components has priority over Denver Capital’s security interest because Boulder Bank’s security interest was perfected first and the security agreement covered after-acquired inventory. The crucial element is the time of perfection relative to the debtor acquiring rights in the collateral.

The scenario presented involves a secured party, Aurora Metals Inc., attempting to perfect its security interest in a large inventory of specialized mining equipment owned by Boulder Mining Co. in Colorado. Aurora Metals filed a financing statement with the Colorado Secretary of State. Subsequently, Boulder Mining Co. relocated a significant portion of this inventory to Wyoming for a temporary project. The question tests the understanding of the rules governing the perfection of security interests in goods that are moved across state lines, specifically focusing on the concept of “last event” for perfection. Under UCC § 9-307, the general rule is that the law of the jurisdiction where the debtor is located governs perfection. However, UCC § 9-316 addresses the situation where collateral is moved to a new jurisdiction. For goods covered by a certificate of title, perfection is governed by the law of the jurisdiction where the certificate is issued. For inventory, the general rule applies, meaning perfection continues for a period of four months after the debtor’s relocation to the new jurisdiction. If the financing statement is filed in the new jurisdiction within that four-month period, perfection continues without interruption. If not, perfection lapses. In this case, Boulder Mining Co. is located in Colorado, and Aurora Metals filed in Colorado. When the inventory was moved to Wyoming, the perfection continued for four months under the UCC § 9-316(a) provisions. If Aurora Metals filed a new financing statement in Wyoming within those four months, its perfection would continue uninterrupted. If it did not file in Wyoming within that period, its perfection would lapse four months after the move, and a subsequent filing in Wyoming would only be effective from the date of that Wyoming filing. Therefore, the effectiveness of Aurora Metals’ security interest in Wyoming depends on whether it filed a new financing statement in Wyoming within four months of the collateral’s move. Without such a filing, its perfection would be subject to Wyoming law from the moment the collateral entered Wyoming, and any subsequent filing in Wyoming would only perfect the interest from the date of that filing, making it subordinate to any intervening perfected security interests or buyers in Wyoming.