The scenario describes a situation where a secured party, Apex Lending, has a security interest in inventory owned by a debtor, Bama Builders. Apex Lending perfected its security interest by filing a financing statement in Alabama. Subsequently, Bama Builders purchases new inventory from a supplier, Crimson Supplies, who also takes a security interest in that specific inventory to secure the purchase price. This creates a purchase money security interest (PMSI) for Crimson Supplies in the newly acquired inventory. Under Article 9 of the Uniform Commercial Code, as adopted in Alabama, a PMSI in goods other than inventory generally has priority over a previously perfected security interest if the PMSI is perfected before or within twenty days after the debtor receives possession of the collateral. However, for inventory, the rule is more stringent: a PMSI holder in inventory will have priority over a prior perfected security interest in the same inventory if the PMSI holder gives notice to the prior secured party and the PMSI is perfected when the debtor receives possession of the inventory. The key here is that Crimson Supplies must have perfected its PMSI and provided notice to Apex Lending before Bama Builders received possession of the new inventory. Without proper notice to Apex Lending and perfection of its PMSI at the correct time, Crimson Supplies’ interest would be subordinate to Apex Lending’s earlier perfected security interest in the after-acquired inventory. Since the question implies Bama Builders already has inventory subject to Apex’s interest, and Crimson Supplies is supplying new inventory, the critical factor for Crimson’s priority is the timely perfection and notification to Apex regarding the PMSI in that specific new inventory. Therefore, Crimson Supplies’ priority hinges on its compliance with the PMSI notification and perfection requirements for inventory.

The scenario involves a security interest in inventory and equipment, where the secured party filed a financing statement covering both. Subsequently, a buyer in the ordinary course of business purchased inventory, and another party acquired a purchase money security interest (PMSI) in new equipment. The core issue is determining the priority of these claims. Under Alabama’s Article 9, a buyer in the ordinary course of business takes free of a security interest created by their seller even if the security interest is perfected and the buyer knows of its existence, provided the buyer buys without knowledge that the sale violates the security agreement (Ala. Code § 7-9A-320). This protection applies to inventory. For the PMSI in equipment, it generally has priority over conflicting security interests if perfected within twenty days after the debtor receives possession of the collateral (Ala. Code § 7-9A-324). However, the initial secured party’s financing statement was filed before the PMSI was created and perfected. The key distinction is that the buyer in ordinary course takes free of the inventory security interest, while the PMSI holder in equipment must navigate the priority rules against the prior perfected security interest. The PMSI holder’s perfection occurs when the debtor receives possession of the equipment. The question hinges on the priority of the PMSI against the prior general security interest in equipment, not the inventory. Since the PMSI in equipment was perfected before the lapse of the initial secured party’s financing statement and before the debtor had rights in the collateral, it would generally take priority over the prior general security interest in equipment, assuming the PMSI was properly perfected. However, the question asks about the priority of the buyer of inventory against the initial secured party, and the PMSI holder against the initial secured party. The buyer in ordinary course of business takes the inventory free of the perfected security interest. The PMSI in equipment has priority over the prior security interest in equipment if perfected within the prescribed timeframe. The explanation focuses on the relative priority of the buyer of inventory and the PMSI holder in equipment against the initial secured party. The buyer of inventory takes free of the security interest. The PMSI in equipment has priority over the earlier filed security interest in equipment.

This question tests the understanding of priority rules for purchase money security interests (PMSIs) in inventory under Alabama’s Article 9 of the Uniform Commercial Code. 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 have given value. Third, the debtor must have rights in the collateral. Crucially, the secured party claiming PMSI priority must, before the debtor receives possession of the inventory, have perfected its security interest in inventory of the same type and given an authenticated notification to any secured party who previously filed a financing statement covering inventory of that type. This notification requirement is key to establishing priority over earlier filed claims. Without this notification, even if the PMSI is otherwise perfected, it will not take priority over a prior perfected security interest.

The scenario involves a debtor, “Magnolia Manufacturing Inc.,” granting a security interest in its inventory and accounts receivable to a secured party, “First National Bank of Alabama.” Magnolia Manufacturing Inc. subsequently files for bankruptcy protection under Chapter 11 in the United States Bankruptcy Court for the Northern District of Alabama. The question probes the priority of the security interest granted to First National Bank of Alabama in relation to other potential claims within the bankruptcy proceedings, specifically focusing on the concept of perfection and its impact on priority. Under Alabama’s Article 9 of the Uniform Commercial Code, a security interest is perfected when it has attached and when all applicable steps for perfection have been taken. For inventory and accounts receivable, perfection is typically achieved by filing a UCC-1 financing statement. Assuming First National Bank of Alabama properly filed its financing statement before Magnolia Manufacturing Inc. filed for bankruptcy, its security interest is perfected. In bankruptcy, a perfected secured creditor generally has priority over unsecured creditors and, in many cases, over certain other secured creditors depending on their own perfection status and the timing of their claims. The Bankruptcy Code, specifically Section 544, grants the bankruptcy trustee “strong-arm” powers, allowing the trustee to assert the rights of a hypothetical judicial lien creditor. However, a properly perfected security interest generally prevails against such a hypothetical lien creditor. Therefore, if First National Bank of Alabama’s security interest was perfected by filing prior to the bankruptcy petition date, it holds a secured claim with priority over unsecured claims in the bankruptcy estate. The question tests the understanding that perfection is crucial for establishing priority, particularly in the context of bankruptcy, and that a perfected security interest is generally insulated from the trustee’s strong-arm powers. The correct answer hinges on the confirmation of proper perfection of the security interest.

The question probes the nuanced priority rules in Alabama secured transactions, specifically when a security interest in fixtures arises. Under Alabama law, which largely follows Article 9 of the UCC, a security interest in a fixture is generally subordinate to a conflicting interest of a person entitled to a remedy for breach of an interest in the real property. However, a purchase money security interest in a fixture has priority over a conflicting interest of a person who has an interest in the real property if the purchase money security interest is perfected before the goods become fixtures or within twenty days thereafter. In this scenario, the security agreement between Bama Builders and First National Bank attached to the specialized HVAC units when Bama Builders acquired rights in them and the bank gave value. The bank perfected its security interest by filing a financing statement covering the HVAC units as fixtures. Critically, the security interest was perfected on January 15th, which was before the HVAC units were installed and became fixtures on February 1st. Therefore, the bank’s perfected purchase money security interest in the HVAC units, which are fixtures, takes priority over the pre-existing mortgage held by Southern Realty Trust, even though Southern Realty Trust’s mortgage interest was recorded prior to the perfection of the security interest. This is a statutory exception to the general rule that the first to record or perfect in real property has priority. The twenty-day grace period for perfection after becoming fixtures is relevant only if perfection occurs after the goods become fixtures, which is not the case here as perfection occurred prior.

The core issue revolves around the priority of security interests when a debtor defaults on multiple secured loans. In Alabama, as under Article 9 of the UCC, 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, whichever occurs first, generally has priority. However, Purchase Money Security Interests (PMSIs) are a significant exception. A PMSI grants the secured party priority over conflicting security interests in the same collateral if certain conditions are met. For inventory, a PMSI holder must perfect its interest and notify any existing secured parties of the PMSI before the debtor receives possession of the inventory. For equipment, the PMSI holder must perfect its interest within 20 days after the debtor receives possession of the collateral. In this scenario, both Bancorp and Capital Corp have perfected security interests. Bancorp perfected its security interest in all of the debtor’s existing and after-acquired equipment by filing on January 1st. Capital Corp obtained a PMSI in the new CNC machine and filed its financing statement on January 15th, which was within 20 days of the debtor receiving possession of the machine. Since Capital Corp’s security interest is a PMSI in equipment and it properly perfected by filing within the statutory grace period, it will have priority over Bancorp’s earlier-filed, non-PMSI security interest in that specific CNC machine. Bancorp’s earlier filing gives it priority as to all other equipment owned by the debtor, but Capital Corp’s PMSI trumps Bancorp’s interest in the CNC machine.

The core issue here is determining the priority of competing security interests in collateral that has been repossessed and then subsequently leased back to the debtor. Article 9 of the Uniform Commercial Code, as adopted in Alabama, governs these priority disputes. Specifically, we need to consider the impact of a financing statement filing and the subsequent possession of the collateral by the secured party. First, consider the security interest of First National Bank of Birmingham (FNBB). FNBB properly filed a financing statement covering all of the debtor’s equipment. This filing generally establishes FNBB’s priority as of the filing date, subject to certain exceptions. Next, consider the transaction with Capital Leasing Corp. (CLC). CLC took possession of the equipment and then leased it back to the debtor. This transaction, where a secured party takes possession of collateral and then leases it back to the debtor, can be complex. However, the critical factor for priority is the attachment and perfection of CLC’s security interest. CLC’s security interest attached when it gave value (by financing the acquisition), the debtor had rights in the collateral, and CLC had a security agreement. For perfection, CLC perfected its security interest by taking possession of the collateral. Under Alabama’s Article 9, perfection by possession is a valid method. The question then becomes whether FNBB’s prior perfected security interest is overcome by CLC’s perfection by possession. Generally, a prior perfected security interest retains its priority even if the collateral is later possessed by another party, unless a specific exception applies. CLC’s leaseback arrangement, while involving possession, does not inherently divest FNBB of its perfected security interest. CLC’s perfection by possession is effective against subsequent claims, but it does not automatically displace a prior perfected interest. The scenario does not describe any subordination agreement or a purchase money security interest (PMSI) situation that would alter the general priority rules. Therefore, the general rule of “first in time, first in right” applies, based on the perfection of the security interests. FNBB perfected its security interest by filing before CLC perfected by possession. Thus, FNBB has priority.

Under Alabama law, specifically Article 9 of the Uniform Commercial Code, the priority of security interests is generally determined by the first party to either file a financing statement or perfect its security interest. However, a Purchase Money Security Interest (PMSI) in inventory has specific, super-priority rules. For a PMSI in inventory to achieve this super-priority, the secured party must satisfy several conditions. First, the security interest must be a PMSI. Second, the secured party must perfect its interest in the inventory. Third, the secured party must give authenticated notice to any other secured party who has filed a financing statement covering the same or similar inventory. This notice must state that the secured party expects to acquire a PMSI in inventory of the debtor and describe the inventory. This notice must be sent before the debtor receives the inventory. In the scenario presented, Southern Bank has a properly perfected security interest in all of the debtor’s inventory. New Era Finance acquires a PMSI in inventory. For New Era Finance to have priority over Southern Bank’s existing perfected security interest in the same inventory, New Era Finance must have perfected its PMSI and provided the required notice to Southern Bank *before* the debtor received the inventory. If New Era Finance perfected its PMSI but failed to provide the notice to Southern Bank, or provided it after the debtor received the inventory, Southern Bank would retain its priority. The question hinges on the timing of perfection and notice relative to the debtor’s receipt of the inventory. Since New Era Finance perfected its PMSI and sent notice to Southern Bank after Southern Bank had already perfected its security interest in all inventory, including after-acquired inventory, and without the requisite notice prior to the debtor receiving the inventory, New Era Finance’s PMSI will not have priority over Southern Bank’s earlier perfected security interest. The crucial element for PMSI super-priority in inventory is the notice to prior filers before the debtor receives the collateral.

Under Alabama law, specifically Article 9 of the Uniform Commercial Code, the priority of security interests is generally determined by the first to file or the first to perfect. However, Purchase Money Security Interests (PMSIs) in inventory hold a special place. For a PMSI in inventory to have priority over a prior-perfected security interest in the same inventory, several strict conditions must be met. First, the PMSI must be perfected when the debtor receives possession of the inventory. Second, the secured party must give an authenticated notification to any secured party whose security interest has already been perfected in the same inventory. This notification must state that the secured party expects to acquire a PMSI in inventory of the debtor, including descriptions of the inventory and accounts thereof. This notice must be sent before the debtor receives possession of the inventory. The question presents a scenario where a prior lender, “Capital Corp,” has a perfected security interest in all of “Magnolia Manufacturing’s” existing and after-acquired inventory. A new lender, “Southern Bancorp,” subsequently acquires a PMSI in Magnolia Manufacturing’s inventory. Southern Bancorp perfects its PMSI and provides notification to Capital Corp. The key is that Southern Bancorp’s notification was sent *after* Magnolia Manufacturing received possession of the inventory. This failure to provide the required notification *before* possession is critical. Therefore, Southern Bancorp’s PMSI will not have priority over Capital Corp’s prior perfected security interest. The priority remains with Capital Corp, as Southern Bancorp did not strictly adhere to the notification requirements for PMSIs in inventory to gain superpriority.

The scenario involves a security interest in inventory and accounts that is perfected by filing a financing statement. The debtor, “Magnolia Manufacturing,” grants a security interest to “First National Bank of Alabama” in all of its inventory and accounts. First National Bank files a timely and proper financing statement with the Alabama Secretary of State on January 15, 2023. Subsequently, Magnolia Manufacturing obtains a loan from “Birmingham Business Capital” and grants them a security interest in the same collateral. Birmingham Business Capital files its financing statement on February 10, 2023. Article 9 of the Uniform Commercial Code, as adopted in Alabama, generally establishes priority based on the first to file or first to perfect rule. In this instance, First National Bank of Alabama filed its financing statement before Birmingham Business Capital. Therefore, First National Bank of Alabama has priority over Birmingham Business Capital with respect to the collateral, which includes both inventory and accounts. The fact that the collateral includes both inventory and accounts does not alter the general priority rule; the same financing statement perfects the security interest in both categories of collateral. Alabama law, consistent with the UCC, prioritizes secured parties based on the chronological order of their perfection, with filing being a primary method of perfection for inventory and accounts.

Under Alabama’s Article 9 of the Uniform Commercial Code, the concept of “attachment” is fundamental to the creation of a security interest. Attachment signifies that a secured party has a legally enforceable right in the collateral. This occurs when three specific conditions are met: value has been given by the secured party, the debtor has rights in the collateral, and there is an authenticated security agreement that describes the collateral. The security agreement must be authenticated, meaning signed or otherwise executed or adopted by the debtor with the present intention to authenticate a record. For the description of collateral, Alabama law, like the UCC generally, permits a description that reasonably identifies the collateral. This can be a specific enumeration or a category. For instance, describing collateral as “all inventory” or “all equipment” is generally sufficient unless a more specific description is required by context or statute to reasonably identify it. The debtor’s rights in the collateral can arise in various ways, such as by ownership, by way of lease, or by way of sale. Value is typically given when the secured party extends credit, whether present or future, or when the debtor receives the collateral. The question hinges on whether the debtor’s purported transfer of rights, coupled with a descriptive, authenticated agreement and the secured party’s extension of credit, satisfies these attachment requirements. The debtor’s subsequent filing for bankruptcy does not negate the attachment that has already occurred. The key is that all three elements must be present for attachment to be effective.

In Alabama, the perfection of a security interest in a deposit account is generally achieved through control. Article 9 of the Uniform Commercial Code, as adopted in Alabama, specifies that control is the exclusive method for perfection of security interests in deposit accounts. This means that filing a financing statement is insufficient to perfect such an interest. Control over a deposit account 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 concerning the balance of the deposit account. This agreement is often memorialized in a “control agreement.” Without control, a security interest in a deposit account may be unperfected, leaving the secured party vulnerable to claims from other creditors, including a bankruptcy trustee. Therefore, for a secured party to have priority over a deposit account, they must obtain control.

The core issue here revolves around the priority of a security interest in a mixed collateral situation, specifically involving inventory and accounts. Alabama law, following Article 9 of the UCC, generally dictates that priority is determined by the first to file or the first to perfect. However, specific rules apply to inventory and its proceeds. When a secured party has a perfected security interest in inventory, that perfection generally extends to the accounts generated from the sale of that inventory. In this scenario, Sterling Bank has a perfected security interest in all of Apex Manufacturing’s inventory and the proceeds thereof. This perfection occurred on January 15th. Apex then sells a portion of this inventory to a customer, creating an account receivable. Subsequently, Sterling Bank files a financing statement covering accounts on February 1st. The question is whether Sterling Bank’s earlier perfection in inventory, which generated the account, grants it priority in the account over its own later-filed financing statement specifically covering accounts. Under UCC § 9-315(a)(2), a security interest in collateral is also perfected in any identifiable proceeds of that collateral. This means Sterling Bank’s January 15th perfection in inventory automatically perfected its security interest in the accounts that arose from the sale of that inventory, as those accounts are proceeds. This perfection is effective from the date of perfection in the original collateral (January 15th). When Sterling Bank files its financing statement covering accounts on February 1st, it is essentially perfecting its interest in the same collateral (now in the form of accounts) that was already perfected through its earlier filing on inventory. The priority date for the security interest in the accounts is therefore the earlier date of January 15th, not February 1st. Therefore, Sterling Bank has priority in the account receivable because its security interest in the account, as proceeds of the inventory, was perfected on January 15th, which predates the filing of any other competing claim that might arise on or after February 1st. The subsequent filing on accounts is merely a continuation or clarification of its already established perfected interest in the proceeds. The UCC prioritizes the earlier perfection date for proceeds.

This question tests the understanding of the priority rules concerning a purchase money security interest (PMSI) in inventory under Alabama’s Article 9. A PMSI grants the seller or lender a special priority status if certain conditions are met. For inventory, the secured party with a PMSI must satisfy three primary requirements to maintain its superpriority status over previously perfected security interests. First, the security interest must be a purchase money security interest. Second, the secured party must have perfected its security interest in the inventory. Third, and crucially for inventory, the PMSI secured party must give an authenticated notification to any secured party that has previously perfected a security interest in inventory of the same type. This notification must be sent before the debtor receives possession of the inventory. The notification must state that the PMSI secured party has or expects to acquire a PMSI in inventory of the debtor and must describe the inventory. If these conditions are met, the PMSI in inventory will have priority over prior perfected security interests in the same collateral. In this scenario, the initial security agreement between First National Bank and “Magnolia Motors” granted a security interest in all of Magnolia Motors’ inventory, which First National Bank properly perfected. Subsequently, “Auto Finance Inc.” extended credit to Magnolia Motors for the purchase of new vehicles, thereby acquiring a PMSI in that inventory. Auto Finance Inc. also properly perfected its security interest. However, for Auto Finance Inc. to have priority over First National Bank’s earlier perfected security interest in the same inventory, Auto Finance Inc. must have provided the required authenticated notification to First National Bank *before* Magnolia Motors received possession of the new vehicles. The question states that Auto Finance Inc. perfected its PMSI but does not mention any notification being sent to First National Bank. Therefore, without the notification, Auto Finance Inc.’s PMSI does not gain priority over First National Bank’s previously perfected security interest. The question asks for the outcome regarding priority, and since the notification requirement was not met, the general priority rule of “first to perfect” applies. First National Bank perfected first.

This scenario involves a purchase money security interest (PMSI) in inventory. Under Alabama’s Uniform Commercial Code (UCC) Article 9, a PMSI holder generally has priority over other secured parties. For inventory, this priority is achieved if the PMSI is perfected when the debtor receives possession of the inventory and the PMSI holder gives an authenticated security agreement and any required notification to other secured parties who have filed against the debtor’s inventory. The debtor, “Dixie Duds Inc.,” has an existing security agreement with “First National Bank of Mobile” covering all its inventory. “Cotton Creek Mills LLC” then sells inventory to Dixie Duds Inc. on credit, retaining a PMSI. To maintain priority over First National Bank, Cotton Creek Mills must perfect its PMSI. For inventory, perfection by filing is generally required, but crucially, for PMSI priority against other inventory secured parties, Cotton Creek Mills must also notify the existing secured party (First National Bank) of its PMSI before Dixie Duds Inc. receives possession of the inventory. This notification requirement is a specific rule for PMSIs in inventory to ensure that prior secured creditors are aware of the new financing. Without this notification, Cotton Creek Mills’ PMSI, despite being a purchase money security interest, would likely be subordinate to First National Bank’s prior perfected security interest in after-acquired inventory. Therefore, the failure to provide the required notification to First National Bank before Dixie Duds Inc. received the inventory means Cotton Creek Mills’ security interest is not perfected in a way that grants it priority over the existing secured party’s claim to that inventory.

In Alabama, as under the Uniform Commercial Code (UCC) Article 9, a security interest attaches when a debtor has rights in the collateral, value has been given by the secured party, and a security agreement exists that describes the collateral. Perfection, which establishes priority against third parties, generally occurs upon attachment or by filing a financing statement, whichever occurs first. However, for certain types of collateral, attachment alone is insufficient for perfection. For inventory, perfection requires filing a financing statement. A security interest in inventory is automatically perfected when it attaches if the secured party is in possession of the inventory. This is a critical distinction. If the secured party is not in possession, filing is the exclusive method of perfection for inventory. The question presents a scenario where a secured party has a valid security agreement and has given value, and the debtor has rights in the inventory. The security interest attaches upon these conditions. However, to be perfected against other creditors, the secured party must have filed a financing statement or taken possession of the inventory. Since the scenario explicitly states the secured party has not filed and is not in possession, the security interest, while attached, remains unperfected. Therefore, the secured party has priority only against the debtor and other unperfected secured parties, but not against a buyer of inventory in the ordinary course of business, who takes free of a security interest created by the seller even if perfected. This buyer’s rights are governed by UCC Section 9-320.

The core issue here revolves around the priority of security interests when a debtor obtains new collateral subject to an after-acquired property clause and also grants a purchase money security interest (PMSI) in that same collateral. Under Alabama’s Article 9 of the Uniform Commercial Code, a PMSI generally has superpriority. However, the timing and perfection of these interests are crucial. First, consider the initial security agreement between AgriBank and Farmer Giles. This agreement grants AgriBank a security interest in all of Farmer Giles’s “farm equipment, now owned or hereafter acquired.” This creates a security interest in after-acquired property. AgriBank perfects this interest by filing a financing statement on January 15, 2023. Next, Farmer Giles purchases a new tractor on credit from TractorCorp on March 1, 2023. TractorCorp takes the necessary steps to obtain a PMSI in the tractor. For a PMSI in equipment to have priority over a prior-perfected security interest in after-acquired property, the PMSI must be perfected within a specific timeframe. Alabama’s UCC § 9-324(a) generally requires perfection no later than 20 days after the debtor receives possession of the collateral. TractorCorp files its financing statement on March 20, 2023. This filing occurs within the 20-day grace period. Therefore, TractorCorp’s PMSI in the tractor, perfected by filing on March 20, 2023, will have priority over AgriBank’s earlier perfected security interest in after-acquired property. This is because the PMSI rules create an exception to the general “first to file or perfect” rule, granting superpriority to PMSI holders who comply with the perfection requirements. AgriBank’s interest attached to the tractor when Farmer Giles acquired rights in it, but TractorCorp’s PMSI takes precedence due to its timely perfection.

The scenario involves a secured party, “Magnolia Manufacturing Finance” (MMF), extending credit to a debtor, “Oak Creek Timberlands LLC” (Oak Creek), using Oak Creek’s inventory and after-acquired inventory as collateral. MMF properly filed a financing statement covering “all inventory, wherever located, now owned or hereafter acquired.” Subsequently, Oak Creek purchased a new, specialized piece of logging equipment on a purchase money security interest (PMSI) basis from “Pioneer Equipment Sales” (Pioneer). Pioneer perfected its PMSI in the logging equipment by filing a financing statement that described the collateral as “all equipment, including logging machinery, now owned or hereafter acquired.” The core issue is the priority between MMF and Pioneer concerning the newly acquired logging equipment. Under Alabama’s Article 9 of the Uniform Commercial Code, a PMSI generally has priority over a conflicting security interest in the same collateral, provided certain conditions are met. For inventory, a PMSI holder must satisfy specific requirements to maintain its superpriority. Alabama UCC § 9-324(a) states that a PMSI in inventory has priority over a conflicting security interest in the same inventory if the PMSI holder meets two conditions: (1) it perfects its security interest in the inventory not later than the time of delivery of the inventory, and (2) any secured party that has priority over the PMSI holder’s security interest receives notification in writing of the PMSI holder’s intent to acquire an interest in the inventory before the debtor receives possession of the inventory. In this case, Pioneer has a PMSI in the logging equipment. The logging equipment is considered inventory for Oak Creek, as it is used in its business of processing timber. Pioneer perfected its PMSI by filing. However, the critical element for PMSI priority in inventory is the notification requirement to prior secured parties. MMF, having a prior perfected security interest in all of Oak Creek’s inventory, would be the party that needed to receive written notification of Pioneer’s intent to acquire an interest in the inventory *before* Oak Creek received possession of the logging equipment. The facts do not state that Pioneer provided such notification to MMF. Without this notification, Pioneer’s PMSI in the logging equipment, while perfected, will not have priority over MMF’s earlier-filed, broader security interest in all inventory, including after-acquired inventory. Therefore, MMF has priority. The calculation is conceptual, not numerical. It involves applying the priority rules of Article 9. The general rule is first-in-time, first-in-right, meaning the first party to file or perfect has priority. However, PMSI in inventory is an exception. The exception requires perfection on delivery and notification to prior secured parties. Since notification was not provided, the exception fails, and the general rule applies. MMF filed first, covering after-acquired inventory. Pioneer’s PMSI is later and lacks the required notification.

The core issue here is determining the priority of competing security interests in inventory. Alabama’s Article 9, like the Uniform Commercial Code, generally follows a “first to file or perfect” rule for priority. However, a Purchase Money Security Interest (PMSI) in inventory receives special treatment. For a PMSI in inventory to have priority, the secured party must satisfy several conditions. First, the security interest must be a PMSI. Second, the secured party must have perfected its security interest in the inventory when the debtor received possession. Third, the secured party must have given an authenticated security agreement to the debtor. Fourth, the secured party must have sent an authenticated notification to any other secured party who had previously filed a financing statement covering inventory of the same type, and that notification must state that the secured party expects to acquire a PMSI in inventory of that type and describe the inventory. This notification requirement is crucial for alerting prior secured creditors to the existence of the PMSI. In this scenario, while Bank A has a prior perfected security interest in all of the debtor’s inventory, and Creditor B has a PMSI, Creditor B failed to provide the required notification to Bank A before the debtor received possession of the new inventory. Therefore, Creditor B’s PMSI in the new inventory does not have priority over Bank A’s earlier perfected security interest. Bank A’s security interest remains prior because Creditor B did not meet the statutory requirements for PMSI priority in inventory.

The question concerns the priority of a security interest in inventory when a buyer of that inventory also has a security interest in its after-acquired inventory. Under Alabama’s Article 9, a buyer in the ordinary course of business (BIOC) 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. Here, Bama Builders is a BIOC purchasing inventory from Construction Supply Co. Construction Supply Co. has granted a security interest in its inventory to First National Bank. Bama Builders has also granted a security interest in its after-acquired inventory to Second Regional Bank. The crucial point is whether Bama Builders’ purchase of inventory from Construction Supply Co. is subject to First National Bank’s security interest. Since Bama Builders is a BIOC, it takes the inventory free of First National Bank’s security interest. The security interest held by Second Regional Bank in Bama Builders’ after-acquired inventory attaches to the inventory once Bama Builders acquires it. However, this does not impact Bama Builders’ ability to take the inventory free of First National Bank’s prior, perfected security interest. The question asks about the priority of the security interest held by Second Regional Bank in the inventory *after* Bama Builders has acquired it. Second Regional Bank’s security interest attaches to the inventory when Bama Builders acquires rights in it. Because Bama Builders took the inventory free of First National Bank’s security interest, First National Bank has no claim to the inventory. Therefore, Second Regional Bank’s perfected security interest in Bama Builders’ after-acquired inventory will have priority over any other claims to that specific inventory, as there are no other secured parties with a prior claim to the inventory once it is owned by Bama Builders. The explanation of priority rules in Alabama’s Article 9, specifically regarding BIOC transactions and the attachment of after-acquired property clauses, is key. A BIOC takes free of a security interest created by its seller. Therefore, Bama Builders takes the inventory from Construction Supply Co. free of First National Bank’s security interest. Second Regional Bank’s security interest in Bama Builders’ after-acquired inventory attaches when Bama Builders acquires rights in the inventory. Since the inventory is free of First National Bank’s security interest when Bama Builders acquires it, Second Regional Bank’s security interest will have priority over any other claims to that inventory because there are no prior perfected security interests in that specific collateral from Bama Builders’ perspective.

The core issue in this scenario 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). In Alabama, as under the Uniform Commercial Code (UCC) generally, the first-to-file or first-to-perfect rule typically governs priority. However, PMSIs often have superpriority status. A PMSI in inventory is granted to a secured party who gives value to enable the debtor to acquire the inventory, and the collateral is in fact the inventory so acquired and its identifiable proceeds. For a PMSI in inventory to have priority over a prior perfected security interest, the PMSI secured party must have perfected its interest before the debtor receives possession of the inventory. Furthermore, the PMSI secured party must have sent an authenticated notification to any secured party who previously filed a financing statement covering inventory of the same type. This notification must state that the secured party expects to acquire a PMSI in inventory of the debtor and describe the inventory by item or type. This notification is effective for five years. In this case, Sterling Bank perfected its security interest in all of Horizon Enterprises’ inventory on January 15th. On February 1st, Apex Finance provided a loan to Horizon Enterprises to acquire new manufacturing equipment, and Apex Finance filed a financing statement covering this equipment. On February 15th, Apex Finance provided a loan to Horizon Enterprises to acquire raw materials for its manufacturing process, and Apex Finance also perfected its security interest in this raw materials inventory. Crucially, Apex Finance sent the required notification to Sterling Bank on February 10th, which was before Horizon Enterprises received the raw materials inventory. Since Apex Finance perfected its PMSI in the raw materials inventory and provided the requisite notification to Sterling Bank prior to Horizon receiving the inventory, Apex Finance’s PMSI has priority over Sterling Bank’s earlier perfected security interest in all inventory. The equipment loan from Apex Finance is a separate collateral type and does not affect the priority of the inventory PMSI. Therefore, Apex Finance holds the superior security interest in the raw materials inventory.

The scenario involves a secured party, “Magnolia Manufacturing Finance” (MMF), holding a security interest in “Bama Builders’ Supply” (BBS) inventory. BBS has also granted a security interest in its inventory to “Dixie Discount Bank” (DDB). Both MMF and DDB have properly filed financing statements. MMF’s security interest was created and attached to the inventory prior to DDB’s. MMF’s initial filing was on January 15, 2023, and DDB’s filing was on February 1, 2023. BBS defaults on its obligations to both lenders. The question revolves around the priority of their security interests in the inventory. Under Alabama’s Article 9, the general rule for priority between secured parties is “first in time, first in right,” meaning the secured party who first files a financing statement or perfects its security interest generally has priority. Since MMF filed its financing statement on January 15, 2023, and DDB filed on February 1, 2023, MMF’s security interest has priority over DDB’s security interest in the inventory, assuming both are properly perfected and no other priority rules apply. There is no mention of a purchase money security interest (PMSI) for either lender, nor any subordination agreements or statutory liens that would alter this general rule. Therefore, MMF, having filed first, has the superior claim to the collateral upon BBS’s default.

This scenario tests the understanding of the priority rules when a purchase money security interest (PMSI) in inventory conflicts with a previously perfected security interest in after-acquired inventory. In Alabama, as under the Uniform Commercial Code (UCC) generally, a PMSI holder in inventory must meet specific requirements to achieve superpriority over earlier perfected security interests. These requirements are detailed in UCC Section 9-324. The debtor, “Southern Steel Fabricators,” granted a security interest in all its existing and after-acquired inventory to “First National Bank of Birmingham” on January 15, 2023, which was properly perfected by filing. On March 1, 2023, “Global Industrial Supply Inc.” sold steel coils to Southern Steel Fabricators on credit, retaining a PMSI in those coils. For Global Industrial Supply Inc. to have priority over First National Bank of Birmingham with respect to the steel coils, it must satisfy the conditions outlined in UCC 9-324(b). This requires that the PMSI be perfected when the debtor receives possession of the inventory, and that the PMSI holder give an authenticated notification to any previously perfected secured party of record regarding the PMSI in inventory. The notification must be sent before the debtor receives possession of the inventory. Assuming Global Industrial Supply Inc. sent this notification to First National Bank of Birmingham on February 20, 2023, and the coils were delivered on March 1, 2023, and Global Industrial Supply Inc. also perfected its PMSI by filing on March 1, 2023, its PMSI would have priority over First National Bank’s security interest in those specific steel coils. The key is the timely notification to the prior secured party. Without such notification, the prior perfected security interest would generally prevail. Therefore, the correct sequence of events and actions for Global Industrial Supply Inc. to achieve priority involves timely perfection and timely notification to the prior secured party.

Under Alabama law, as governed by Article 9 of the Uniform Commercial Code, the priority of security interests is generally determined by the order of filing or perfection. However, there are significant exceptions, particularly for Purchase Money Security Interests (PMSIs). A PMSI arises when a secured party provides value to enable a debtor to acquire rights in collateral, and the value is in fact used for that purpose. For inventory, a PMSI generally achieves superpriority over prior perfected security interests in the same inventory if two conditions are met: (1) the PMSI is perfected when the debtor receives possession of the inventory, and (2) the PMSI holder gives an authenticated notification to any prior secured party that has filed or is perfected regarding the inventory, and this notification is received within a specific timeframe before the debtor receives possession of the inventory. In this scenario, Magnolia Bank has a prior perfected security interest in all of Crimson Company’s inventory. Evergreen Corp. provides financing for Crimson Company to acquire new specialized drilling equipment, which is to be sold as inventory. Evergreen Corp. perfects its PMSI in this new inventory on the same day Crimson Company receives possession. To gain superpriority over Magnolia Bank’s existing security interest in the inventory, Evergreen Corp. must also satisfy the notification requirement. This notification must be sent and received by Magnolia Bank before Crimson Company receives possession of the new inventory. If Evergreen Corp. fails to provide this notification within the statutory period before delivery, its PMSI in the new inventory will be subordinate to Magnolia Bank’s prior perfected security interest. Therefore, the critical factor for Evergreen Corp. to achieve superpriority is the timely notification to Magnolia Bank.

In Alabama, a secured party’s right to repossess collateral upon a debtor’s default is governed by Article 9 of the Uniform Commercial Code. Section 9-609 of the UCC, as adopted in Alabama, permits a secured party to take possession of the collateral without judicial process if this can be done without breach of the peace. The concept of “breach of the peace” is crucial and is interpreted by courts to mean any conduct that would tend to disturb public order or tranquility. This includes actions that involve violence, threats of violence, or forceful entry into a dwelling or secured premises without consent. If a secured party breaches the peace during repossession, they forfeit their right to repossess the collateral and may be liable for damages. For instance, if a secured party forcibly enters a debtor’s locked garage, this would likely constitute a breach of the peace. However, if the collateral is parked on a public street and the secured party simply drives it away, this generally does not breach the peace. The explanation of the scenario hinges on the secured party’s actions and the location of the collateral. The question asks about the secured party’s ability to repossess a vehicle parked in a private driveway, which presents a potential for breach of the peace. Alabama case law, consistent with general UCC interpretations, emphasizes that entry into a debtor’s dwelling or attached garage without consent is a breach of the peace. Entry into an unenclosed driveway, however, is generally not considered a breach of the peace, as it is a public or semi-public space. Therefore, the secured party can repossess the vehicle from the driveway without breaching the peace, provided no force is used against persons or to enter enclosed structures.

The core issue revolves around the perfection of a security interest in a deposit account under Alabama law, specifically focusing on the exclusive method prescribed by Article 9 of the Uniform Commercial Code. Alabama, like other adopting states, follows UCC § 9-104, which designates “control” as the sole method for perfecting a security interest in a deposit account. Control is achieved when the secured party is the bank where the deposit account is maintained, or when the debtor has agreed that the bank will comply with instructions from the secured party concerning the balance of the deposit account. Filing a financing statement, as generally permitted for many types of collateral under UCC § 9-310, is explicitly excluded as a method of perfection for deposit accounts. Therefore, a security interest in a deposit account is perfected only when the secured party obtains control over the account. The scenario describes a secured party filing a financing statement covering the debtor’s general intangibles and deposit accounts, but without obtaining control. This filing is insufficient for perfection of the security interest in the deposit account.

The core issue revolves around the priority of a security interest in inventory when a buyer of that inventory, who also has a purchase money security interest (PMSI) in the inventory, subsequently uses that inventory as collateral for a separate loan. In Alabama, as under general UCC Article 9 principles, a PMSI holder in inventory generally has priority over other secured parties, provided certain conditions are met. Specifically, under Alabama Code Section 7-9A-324, a PMSI in inventory has priority over a conflicting security interest in the same inventory if the PMSI holder meets two conditions: (1) the PMSI is perfected when the debtor receives possession of the inventory, and (2) the PMSI holder gives an authenticated notification to any other secured party who has a security interest in that inventory, and that notification is received by the other secured party before the debtor receives possession of the inventory. In this scenario, Sterling Corp. has a perfected security interest in all of “Acme Widgets Inc.’s” inventory, including after-acquired inventory. This establishes Sterling Corp. as a prior secured party. Acme Widgets Inc. then obtains a PMSI in new inventory from “Gadget Finance Co.” to facilitate its purchase. Gadget Finance Co. perfects its PMSI. The critical step for Gadget Finance Co. to maintain its priority over Sterling Corp.’s existing security interest in that same inventory is to provide Sterling Corp. with proper notification *before* Acme Widgets Inc. receives possession of the inventory. If Gadget Finance Co. fails to provide this notification, Sterling Corp.’s prior perfected security interest will generally take precedence over Gadget Finance Co.’s PMSI in that specific inventory. Therefore, the question hinges on whether Gadget Finance Co. fulfilled the notification requirement to preserve its PMSI priority against Sterling Corp.’s prior perfected security interest in the inventory. Without proof of such notification, Sterling Corp.’s perfected security interest remains superior.

The question asks about the priority of a security interest in after-acquired inventory when a bankruptcy petition is filed. In Alabama, as under the Uniform Commercial Code (UCC) Article 9, a security interest generally attaches to after-acquired property when the debtor obtains rights in that property. However, the filing of a bankruptcy petition triggers the automatic stay, which can impact the ability of a secured party to perfect its interest in collateral that the debtor acquires after the petition date. Under Section 549 of the Bankruptcy Code, post-petition perfection is generally prohibited unless specifically authorized by the bankruptcy court. While the security interest in after-acquired inventory attaches automatically upon the debtor acquiring the inventory, the *perfection* of that interest, which is crucial for establishing priority against other creditors and the bankruptcy estate, is affected by the bankruptcy filing. Specifically, UCC § 9-317(a)(2) generally states that an unperfected security interest is subordinate to the rights of a buyer of goods. In the context of bankruptcy, the trustee often has the status of a hypothetical lien creditor or a buyer in the ordinary course of business. Therefore, inventory acquired by the debtor *after* the bankruptcy petition is filed is typically subject to the trustee’s powers, and the secured party’s interest in that post-petition acquired inventory may remain unperfected unless the court grants relief. This means that the secured party’s priority claim extends to inventory acquired *before* the bankruptcy filing, but not to inventory acquired *after* the filing, unless specific court authorization for post-petition perfection is obtained. The question focuses on the period *after* the bankruptcy petition is filed.

The scenario involves a purchase money security interest (PMSI) in inventory and equipment. In Alabama, as under the general provisions of UCC Article 9, a PMSI holder generally has priority over other secured parties. For inventory, the PMSI holder must perfect its interest by filing a financing statement before the debtor receives possession of the inventory and must notify any existing secured party of record whose collateral covers the inventory. For equipment, the PMSI holder must perfect its interest by filing a financing statement before or within twenty days after the debtor receives possession of the collateral. Here, Crimson Motors has a PMSI in both the new inventory (automobiles) and the service equipment. Crimson Motors filed a financing statement covering inventory and equipment on January 15th, which was before the debtor, Bama Auto Sales, received possession of the new inventory on January 20th. This satisfies the perfection requirement for inventory. Crimson Motors also filed on January 15th, which is within the twenty-day grace period after Bama Auto Sales received the equipment on January 10th. Therefore, Crimson Motors has a continuously perfected PMSI in both the inventory and the equipment. However, the question asks about the priority relative to the previously perfected security interest held by Bank of Tuscaloosa, which has a general security interest in all of Bama Auto Sales’ assets, including after-acquired property. Under Alabama law, a perfected PMSI generally takes priority over a prior perfected security interest in the same collateral, provided the PMSI requirements are met. Since Crimson Motors perfected its PMSI in inventory before delivery and within the grace period for equipment, its security interest in both the inventory and the equipment will have priority over Bank of Tuscaloosa’s earlier, general security interest.

This scenario tests the understanding of perfection by possession under Alabama’s Article 9, specifically concerning certificated investment property. Under UCC § 9-313(a), a secured party can perfect a security interest in certificated securities by taking physical possession of the certificated security. Alabama has adopted Article 9 of the UCC with some variations. For certificated investment property, possession is a primary method of perfection. The question hinges on whether the secured party’s temporary relinquishment of possession for a specific, authorized purpose, without the debtor regaining control or the secured party consenting to a loss of possession, negates perfection. Alabama’s Article 9, consistent with the UCC, generally allows for temporary relinquishment of possession for purposes such as presentation, collection, or exchange, provided the secured party does not relinquish control. If the collateral is released to a third party solely for the purpose of presentation to the issuer for transfer, and the secured party has made arrangements to have the collateral returned to its possession promptly thereafter, the security interest remains perfected. In this case, the collateral was released to the brokerage firm solely for the purpose of facilitating the sale, a recognized exception where perfection is maintained. Therefore, the security interest remains perfected by possession.