In Arkansas secured transactions, the perfection of a security interest in collateral is crucial for establishing priority against third-party claims. When a debtor is located in Arkansas, and the collateral is goods, perfection typically occurs by filing a financing statement in the appropriate jurisdiction, which is the office of the Secretary of State of Arkansas. However, if the collateral is a deposit account, a security interest can only be perfected by control. Control over a deposit account is achieved when the secured party is the bank with which the deposit account is maintained, or when the debtor has agreed in writing that the bank maintain the deposit account subject to the secured party’s control. This is a significant departure from perfection rules for other types of collateral. The Arkansas UCC specifically addresses deposit accounts in § 4-104(a)(29) and § 9-104, outlining the requirements for control. Therefore, for a deposit account, filing a financing statement is ineffective for perfection. The scenario presented involves a security interest in a debtor’s checking account, which is a deposit account. Thus, control is the exclusive method of perfection.

The scenario describes a situation where a secured party, “Ozark Outfitters,” has a security interest in inventory owned by “Riverbend Retailers.” Riverbend Retailers is located in Arkansas, and Ozark Outfitters has properly perfected its security interest by filing a financing statement in Arkansas. Riverbend Retailers then decides to sell a substantial portion of its inventory to another business, “Ozark Mountain Goods,” which is also located in Arkansas. The question revolves around whether Ozark Mountain Goods takes the inventory free of Ozark Outfitters’ security interest. Under Arkansas UCC § 9-320, a buyer in the ordinary course of business takes goods 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. A buyer in the ordinary course of business is defined in Arkansas UCC § 1-201(9) as a person that buys goods in good faith, without knowledge that the sale violates the rights of the secured party in the goods, and from a person in the business of selling goods of that kind. Selling inventory is precisely the type of transaction that occurs in the ordinary course of business for a retailer like Riverbend Retailers. Ozark Mountain Goods, by purchasing inventory from Riverbend Retailers, which is in the business of selling such goods, fits the definition of a buyer in the ordinary course of business. Therefore, Ozark Mountain Goods takes the inventory free of Ozark Outfitters’ security interest, provided the purchase was made in good faith and without knowledge that the sale violated Ozark Outfitters’ rights. The fact that Ozark Outfitters’ security interest was perfected is irrelevant to this specific rule for buyers in the ordinary course of business.

The core principle being tested here relates to the perfection of security interests in fixtures under Arkansas law, specifically referencing Arkansas Code Annotated § 4-9-334. This section dictates that a security interest in fixtures is governed by the law of fixtures. Perfection of a security interest in fixtures requires filing a fixture filing in the real property records. A fixture filing is a UCC-1 financing statement that also contains additional information, specifically identifying the collateral as fixtures and providing a sufficient description of the real property to which the fixtures are affixed. The filing must occur in the office where a mortgage on the real property would be filed or recorded. While a security agreement is necessary for the creation of a security interest, and the filing of a financing statement is generally necessary for perfection against third parties, the specific requirements for perfection in fixtures, including the location and content of the filing, are paramount. A purchase-money security interest in a fixture has priority over conflicting interests in the fixture if the requirements of § 4-9-334(d) are met, which includes having attached the security interest and having filed a fixture filing before the goods become fixtures or within twenty days thereafter. However, the question asks about the general perfection of a security interest in fixtures, not necessarily a PMSI or priority dispute. Therefore, the correct method involves a fixture filing in the appropriate real property records office.

In Arkansas, when a secured party seeks to repossess collateral after a debtor’s default, the primary legal framework governing this process is Article 9 of the Uniform Commercial Code (UCC), as adopted by Arkansas. Arkansas law, like most states adopting the UCC, emphasizes commercial reasonableness in repossession. This means the secured party must conduct the repossession in a manner that is generally accepted in the relevant commercial circles. While the UCC generally permits self-help repossession without judicial intervention, it strictly prohibits any breach of the peace. A breach of the peace occurs when the secured party’s actions would likely disturb public order or create a risk of violence. This includes entering a debtor’s premises without permission, using force, or causing a disturbance. If a breach of the peace occurs, the secured party may be liable for conversion or other torts. The UCC also requires that after repossession, the collateral must be disposed of in a commercially reasonable manner, and any surplus proceeds must be remitted to the debtor. The debtor also has a right to redeem the collateral before disposition by fulfilling the secured obligation. The specific actions taken by the secured party, such as entering a locked garage or confronting the debtor, are crucial in determining whether a breach of the peace occurred. The UCC’s intent is to balance the secured party’s right to recover collateral with the debtor’s right to be free from unreasonable intrusion or harm.

In Arkansas, when a secured party intends to take possession of collateral after a default, the process is governed by Article 9 of the Uniform Commercial Code, as adopted in Arkansas. Specifically, Arkansas Code Annotated § 4-9-609 outlines the secured party’s rights regarding repossession. This section permits a secured party to take possession of the collateral without judicial process if it can be done without breach of the peace. The concept of “breach of the peace” is critical and is interpreted broadly to include any disturbance of public order or tranquility. This means that a secured party cannot use force, threats of force, or enter a debtor’s dwelling without consent if it would cause a disturbance. If the collateral is located in a locked garage or building, the secured party generally cannot break in. Instead, they would need to seek a court order. The UCC, as adopted in Arkansas, emphasizes self-help repossession but strictly prohibits actions that could lead to violence or public disorder. Therefore, a secured party must exercise caution and respect the debtor’s property and privacy to avoid legal repercussions for wrongful repossession. The determination of whether a breach of the peace occurred is fact-specific and depends on the circumstances of the repossession attempt.

This scenario tests the understanding of perfection by possession under Arkansas UCC Article 9. A secured party perfects a security interest in goods by taking physical possession of those goods. This method of perfection is generally available for instruments, negotiable documents, tangible chattel paper, goods, and certificated securities. For goods, the secured party must have actual physical control of the collateral. If a debtor allows a third party, like a warehouse operator, to hold the goods for the debtor’s benefit, possession by the secured party is not achieved. The question hinges on whether the secured party, “Arkansas Capital Corp.,” has truly gained possession, thereby establishing perfection against other creditors. Simply having a contract with a third-party warehouse that acknowledges Arkansas Capital Corp.’s interest is insufficient if the warehouse continues to hold the goods for the debtor’s account without explicit acknowledgment of holding for Arkansas Capital Corp. exclusively. The key is the secured party’s dominion and control over the goods, displacing the debtor’s control. In this case, the warehouse acknowledging Arkansas Capital Corp.’s interest but continuing to operate under the debtor’s general instructions means the debtor retains control, and thus Arkansas Capital Corp. has not perfected by possession. Perfection would likely require the warehouse to acknowledge it holds the goods *for* Arkansas Capital Corp. and to act solely on Arkansas Capital Corp.’s instructions regarding those goods.

In Arkansas, under Article 9 of the Uniform Commercial Code, the perfection of a security interest in a motor vehicle that is subject to a certificate of title statute is governed by the certificate of title laws of Arkansas, not by filing a financing statement. Arkansas Code § 4-9-303(c) specifically addresses this, stating that if a vehicle is subject to a certificate of title statute, perfection of a security interest therein and the effect of the security interest are governed by the certificate of title statute. Arkansas Code § 4-9-311(a)(2) further clarifies that filing a financing statement is not the proper method for perfection for such goods. Therefore, the correct method to perfect a security interest in a car titled in Arkansas is to have the security interest noted on the certificate of title itself, as prescribed by Arkansas’s motor vehicle title laws. This method provides public notice and establishes priority over other claims. Filing a financing statement with the Secretary of State would be ineffective for a vehicle already subject to a certificate of title.

This question pertains to the priority of security interests under Arkansas’s Article 9 of the Uniform Commercial Code. Specifically, it addresses the situation where a purchase money security interest (PMSI) is claimed in inventory. Arkansas law, consistent with the UCC, generally grants PMSI holders priority in inventory if certain conditions are met. For a PMSI in inventory to have priority over a prior perfected security interest in the same collateral, the PMSI holder must have perfected its interest and the debtor must have received possession of the inventory. Crucially, the PMSI holder must also give notification to any prior secured party of record before the debtor receives possession of the inventory. This notification requirement ensures that the prior secured party is aware of the new PMSI and can make informed decisions. If the PMSI holder fails to provide this notification, their priority over the prior perfected security interest will be lost, and they will be subordinate to the earlier interest. Therefore, in this scenario, even though the PMSI was properly filed and the debtor received possession, the lack of notification to the existing secured party means the prior secured party retains its priority.

The scenario involves a debtor, “Delta Manufacturing,” granting a security interest in its inventory to “First National Bank” (FNB). Delta Manufacturing then sells some of this inventory to “Apex Retailers,” a buyer in the ordinary course of business. Under Arkansas Code § 4-9-320, a buyer in the ordinary course of business takes free of a security interest created by its seller even though the security interest is perfected and even though the buyer knows of its existence, unless the buyer knows that the sale is in violation of the security agreement. Here, Apex Retailers purchased inventory in the ordinary course of business from Delta Manufacturing, its seller. There is no indication that Apex knew the sale was in violation of FNB’s security agreement. Therefore, Apex takes the inventory free of FNB’s security interest. The perfection of FNB’s security interest by filing a financing statement is relevant for priority against other secured parties or lien creditors, but it does not prevent a buyer in the ordinary course from taking free of the security interest under § 4-9-320. The fact that FNB’s security interest was in “all inventory” is also consistent with Apex taking free of it.

The scenario involves a secured party, Ozark Equipment Finance, which has a perfected security interest in inventory owned by Batesville Manufacturing, a debtor. The collateral is inventory, which by its nature is constantly being sold and replaced. Batesville Manufacturing experiences financial distress, leading to bankruptcy. A critical issue in bankruptcy is the treatment of secured claims. Under Article 9 of the Uniform Commercial Code, as adopted in Arkansas, a security interest continues in collateral even if it is sold, exchanged, or otherwise disposed of, unless the secured party authorized the disposition free of the security interest (UCC § 9-315(a)(1)). Furthermore, a security interest attaches to any identifiable proceeds of collateral (UCC § 9-315(a)(2)). Proceeds are defined broadly to include whatever is received upon the sale, exchange, collection, or other disposition of collateral (UCC § 9-102(a)(41)). In this case, the inventory was sold, and the proceeds are the accounts receivable generated from those sales. Ozark Equipment Finance’s perfected security interest in the inventory naturally extends to the accounts receivable that are the direct proceeds of the sale of that inventory. Therefore, Ozark Equipment Finance retains its perfected security interest in these accounts receivable. The bankruptcy trustee’s role is to gather and liquidate the debtor’s assets for the benefit of all creditors, but this does not extinguish valid, perfected security interests. The trustee takes the property subject to existing liens.

The scenario involves a purchase money security interest (PMSI) in inventory. In Arkansas, under UCC § 9-324(b), a PMSI in inventory generally requires a secured party to file a financing statement and send an authenticated notification to any existing secured party whose security interest covers the same inventory. The notification must be sent within a specific timeframe to maintain priority. Specifically, the notification must be sent before the debtor receives possession of the inventory. If the notification is sent after the debtor receives possession, the PMSI holder’s priority is lost. The notification must also identify the secured party by name and address and state that the secured party expects to acquire a PMSI in inventory of the debtor, enabling the recipient to identify the goods and the debtor. In this case, AgriBank’s notification was sent after the debtor, Delta Farms, received the fertilizer. Therefore, AgriBank’s PMSI in the fertilizer inventory does not have priority over the existing security interest held by First National Bank. First National Bank’s earlier-perfected security interest continues to have priority.

The question assesses the understanding of how a security interest in inventory is perfected and the priority rules when a buyer in the ordinary course of business purchases goods subject to such a security interest. Under Arkansas law, specifically UCC § 9-320, a buyer in the ordinary course of business takes free of a security interest created by the seller even though the security interest is perfected and even though the buyer knows of its existence, unless the buyer knows that the sale is in ordinary course of business is one of the exceptions to this rule. The exceptions are very narrow. The buyer must be buying from a person engaged in the business of selling goods of that kind. In this scenario, “AgriCorp” is a secured party with a perfected security interest in “FarmFresh Produce’s” entire inventory of fruits and vegetables. “Gourmet Grocers,” a retail grocery store, is buying these goods from FarmFresh Produce. Gourmet Grocers is a buyer in the ordinary course of business because it is buying goods in the ordinary course from a person in the business of selling goods of that kind. Therefore, Gourmet Grocers takes the inventory free of AgriCorp’s security interest. The fact that AgriCorp’s security interest is perfected is irrelevant to this outcome. The question tests the fundamental principle of buyer-in-ordinary-course status and its effect on security interests.

In Arkansas, under Article 9 of the Uniform Commercial Code, the perfection of a security interest in a motor vehicle typically requires notation on the certificate of ownership. However, there are specific exceptions and nuances. For a purchase money security interest (PMSI) in inventory held by a dealer, perfection is achieved by filing a financing statement. If a lender finances a new inventory of cars for a dealership in Little Rock, Arkansas, and files a UCC-1 financing statement correctly, that filing perfects the security interest in those vehicles as inventory. If another lender later attempts to perfect a security interest in the same inventory by having the vehicles’ certificates of title noted, this second method would generally be subordinate to the first lender’s perfected PMSI in inventory, provided the initial filing was proper and timely. This is because the UCC-1 filing provides notice to other creditors and establishes priority for inventory financing, overriding the certificate of title notation requirement for inventory held for sale. Arkansas Code § 4-9-311(d) explicitly states that compliance with a certificate of title statute is not required for perfection of a security interest in collateral covered by a certificate of title if the collateral is inventory held by a person who is in the business of selling goods of that kind. Therefore, the initial filing is the controlling method for perfection and priority in this scenario.

In Arkansas, a secured party’s right to repossess collateral upon a debtor’s default is governed by Article 9 of the Uniform Commercial Code. Specifically, Arkansas Code § 4-9-609 outlines the rules for repossession. This section permits a secured party to take possession of the collateral without judicial process if it can be done without a breach of the peace. A breach of the peace generally occurs when actions taken by the secured party involve violence, threats of violence, or entry into a debtor’s dwelling without consent. The determination of whether a breach of the peace has occurred is fact-specific, considering the totality of the circumstances. For example, entering a locked garage or forcibly entering a home would likely constitute a breach of the peace. However, if the collateral is located on a public street or in an unlocked area, repossession without judicial intervention is generally permissible. The UCC also provides for repossession by using judicial procedures if self-help repossession would likely result in a breach of the peace. The secured party must also comply with any specific notice requirements or prohibitions established by Arkansas law beyond the UCC, although Article 9 generally preempts state law in this area unless the state law is a general consumer protection law. The key is that the secured party cannot use deceptive means or force that would disturb public order or safety.

This question tests the understanding of perfection and priority rules under Arkansas UCC Article 9, specifically concerning after-acquired property clauses and purchase money security interests (PMSIs) in inventory. When a secured party has a security interest in “all inventory now owned or hereafter acquired” by a debtor, this after-acquired property clause attaches to inventory acquired by the debtor after the initial security agreement. A purchase money security interest in inventory has special priority rules. For inventory, a PMSI secured party must meet two requirements to have priority over a prior perfected security interest in the same inventory: (1) the PMSI must be perfected when the debtor receives possession of the inventory, and (2) the PMSI secured party must give an Article 9 notification to any other secured party who has a perfected security interest in the inventory or who has filed a financing statement covering the inventory before the date of the PMSI filing. If these requirements are met, the PMSI holder has priority. In this scenario, Sterling Bank has a perfected security interest in all of “Acme Widgets” inventory, including after-acquired inventory. Crystal Corp. has a PMSI in new widget inventory acquired by Acme Widgets. Crystal Corp. perfects its PMSI and provides the required notification to Sterling Bank *before* Acme Widgets receives possession of the new widget inventory. Therefore, Crystal Corp.’s PMSI has priority over Sterling Bank’s blanket security interest in that specific new widget inventory. The notification requirement is crucial for inventory PMSIs to gain superpriority.

In Arkansas, when a secured party has a valid security interest in collateral, and that collateral is sold or disposed of in a transaction that does not constitute an Article 9 disposition, the secured party’s rights in the collateral generally continue in the hands of the transferee, unless the secured party authorized the disposition free of the security interest. This is often referred to as the “first-to-file” or “first-to-perfect” rule’s extension into subsequent transactions involving the collateral. However, Article 9 provides specific exceptions and rules regarding buyer in the ordinary course of business (BIOC) and other transferees. A buyer in the ordinary course of business, as defined in Arkansas Code § 4-1-201(9), takes free of a security interest created by the seller even if the security interest is perfected and even if the buyer knows of its existence, provided the buyer buys in good faith without knowledge that the sale is in violation of the security agreement. If the sale is not in the ordinary course of business, or if the buyer does not meet the BIOC definition, the security interest may still attach to the collateral in the buyer’s hands. Therefore, to determine if the security interest survives, one must analyze whether the transferee qualifies for an exception, such as being a BIOC, and whether the disposition itself was authorized. In this scenario, the sale to the dealer was not in the ordinary course of business as it was a bulk sale of inventory not typical for a consumer goods dealer. The subsequent sale to Ms. Gable, if she is a typical consumer purchasing a single item of inventory from a dealer, would likely be a sale in the ordinary course of business. If the original secured party had perfected its security interest by filing a financing statement in Arkansas, and the dealer purchased the collateral in a transaction not in the ordinary course of business, the security interest would remain attached to the collateral. Ms. Gable, as a buyer in the ordinary course of business from the dealer, would then take the collateral free of the original secured party’s security interest. The original secured party’s recourse would be against the dealer for conversion or breach of the security agreement.

The scenario involves a purchase money security interest (PMSI) in inventory. Under Arkansas law, specifically Arkansas Code § 4-9-312(c), a PMSI in inventory has priority over a conflicting security interest in the same inventory if the PMSI lender gives new value, the debtor receives possession of the inventory, the PMSI is perfected when the debtor receives possession of the inventory, and the PMSI lender gives an authenticated notification to any secured party whose previously filed financing statement covers the inventory. This notification must be sent before the expiration of the four-month period specified in Arkansas Code § 4-9-317(c) for a financing statement covering inventory. In this case, “Ozark Auto Parts” has a PMSI in inventory and properly filed its financing statement. “River Valley Finance” has a prior perfected security interest in all of Ozark Auto Parts’ inventory. For River Valley Finance’s prior perfected security interest to be subordinated to Ozark Auto Parts’ PMSI, Ozark Auto Parts must have given River Valley Finance proper notification of its PMSI in inventory. The question states that Ozark Auto Parts sent the notification to River Valley Finance. The critical factor for priority is that this notification must be sent before the debtor receives possession of the inventory, or within a specified grace period after the debtor receives possession, which is typically tied to the filing of the financing statement for the PMSI. Arkansas Code § 4-9-324(b) specifically addresses PMSI in inventory and requires that the PMSI lender give notification to prior secured parties. The notification requirement is key to overcoming the prior perfected security interest. Since Ozark Auto Parts sent the notification, and assuming it was sent in compliance with the timing requirements of Article 9, its PMSI in inventory would generally have priority over River Valley Finance’s earlier perfected security interest in the same collateral. The question tests the understanding of the notification requirement for PMSI in inventory to achieve superpriority.

This question tests the understanding of perfection by possession under Arkansas UCC Article 9, specifically concerning certificated securities. Under Arkansas Code § 4-9-313(a), possession is a method of perfection for certain collateral types. For certificated securities, perfection occurs when the secured party obtains possession of the certificated security, as defined in Arkansas Code § 4-8-102(a)(4). The explanation of this concept involves understanding that possession serves as a public notice of the security interest, akin to filing a financing statement for other types of collateral. This method is particularly relevant for tangible assets where physical control is achievable and desirable for the secured party. The scenario highlights that even with a filed financing statement, possession is the exclusive method for perfecting a security interest in a certificated security if the secured party is to achieve that status. Without physical possession by the secured party or its agent, the security interest in the certificated security remains unperfected against a buyer of the security that receives delivery under Arkansas Code § 8-301. Therefore, the timing of obtaining possession is crucial for establishing priority.

The scenario describes a situation where a secured party, “Ozark Outfitters,” has a security interest in inventory. A debtor, “Riverbend Ranch,” has granted this security interest. The question revolves around the priority of this security interest when Riverbend Ranch sells inventory to a buyer in the ordinary course of business. Article 9 of the Uniform Commercial Code (UCC), as adopted in Arkansas, addresses this. Specifically, UCC § 9-320 (Arkansas Code § 4-9-320) states that a buyer in ordinary course of business takes free of a security interest created by the seller even if the security interest is perfected and even if the buyer knows of its existence, unless the buyer knows that the sale is in violation of the security agreement. In this case, Ozark Outfitters’ security interest in the inventory is perfected. However, the buyer, “Prairie Goods Inc.,” is a buyer in the ordinary course of business. There is no indication that Prairie Goods Inc. knew the sale was in violation of the security agreement. Therefore, Prairie Goods Inc. takes the inventory free of Ozark Outfitters’ security interest. This is a fundamental principle of secured transactions designed to facilitate commerce by ensuring that ordinary course buyers are not encumbered by hidden security interests. The explanation does not involve any calculations.

The scenario describes a situation where a secured party, First National Bank of Little Rock, has a perfected security interest in inventory owned by “Ozark Outfitters,” a business operating in Arkansas. The security agreement covers all present and after-acquired inventory. Ozark Outfitters then enters into a transaction with “Prairie Produce,” a supplier of fresh vegetables. Prairie Produce delivers a shipment of produce to Ozark Outfitters, and the terms of sale indicate that title to the produce passes to Ozark Outfitters upon delivery. The question asks about the priority of the security interests. Under Arkansas Code Annotated § 4-9-324, a secured party with a perfected security interest in inventory has priority over a buyer of the inventory who is not a buyer in the ordinary course of business. However, a buyer in the ordinary course of business takes free of a security interest created by the seller even though the security interest is perfected and even though the buyer knows of its existence, unless the buyer knows that the sale is in ordinary course of financing. This exception is typically related to the buyer’s knowledge that the sale is part of a bulk sale or disposition of substantially all of the assets of the enterprise. In this case, Prairie Produce is selling goods that are part of Ozark Outfitters’ inventory. Assuming Prairie Produce is a regular supplier and the transaction is a standard sale of goods, Prairie Produce would likely qualify as a buyer in the ordinary course of business with respect to the goods it is selling to Ozark Outfitters. However, the UCC distinguishes between a buyer of goods and a supplier selling goods into inventory. A supplier selling goods to a business that then incorporates those goods into its inventory is generally not considered a “buyer” in the context of § 4-9-324. Instead, the priority of a supplier’s interest in goods delivered to a debtor who has granted a security interest in after-acquired inventory is governed by other provisions. When goods are delivered to a debtor who has granted a security interest in after-acquired inventory, and the supplier has retained a purchase-money security interest (PMSI) in those goods, that PMSI can gain priority over a prior perfected security interest in inventory if certain conditions are met. These conditions typically involve timely filing and notification to the prior secured party. However, the question does not state that Prairie Produce has a PMSI. If Prairie Produce does not have a PMSI, and it is simply selling goods on open account or with retention of title that passes upon delivery, then its claim is likely subordinate to the perfected security interest of First National Bank of Little Rock in Ozark Outfitters’ inventory, including the newly acquired produce. This is because First National Bank’s security interest in after-acquired inventory attaches to the inventory as soon as Ozark Outfitters acquires rights in it, which occurs upon delivery. Prairie Produce’s interest, lacking a PMSI or other specific statutory priority, would be subject to the prior perfected security interest. Therefore, First National Bank of Little Rock would have priority. The calculation, in essence, is a determination of priority based on the UCC’s rules. First, identify the secured parties and the collateral. First National Bank has a perfected security interest in inventory, including after-acquired inventory. Prairie Produce is a seller of goods to Ozark Outfitters. Second, determine the nature of Prairie Produce’s interest. The facts state it’s a sale of produce, with title passing upon delivery. There is no mention of a PMSI. Third, apply the relevant priority rules. Under § 4-9-322, a perfected security interest has priority over an unperfected security interest. If both are perfected, the first to file or perfect prevails. Here, First National Bank is perfected. Prairie Produce’s interest is likely unperfected unless it has a PMSI that was perfected. Even if Prairie Produce had a PMSI, its priority would depend on compliance with § 4-9-324. Without a PMSI, or if its PMSI is unperfected, First National Bank’s prior perfected security interest in after-acquired inventory prevails. Final Answer is First National Bank of Little Rock.

The scenario involves a buyer in ordinary course of business purchasing inventory from a seller who has granted a security interest in that inventory to a lender. Under Arkansas law, specifically Arkansas Code § 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 ordinary course of business and is not in the ordinary course of the business of the seller. This provision is crucial for the smooth functioning of commerce, allowing businesses to sell inventory without buyers needing to conduct extensive due diligence regarding the seller’s financing arrangements. The buyer in this case, “Farm Fresh Produce,” purchased apples in the ordinary course of business from “Orchard Goods Inc.,” a seller of produce. The security interest held by “AgriBank” in Orchard Goods Inc.’s inventory was perfected. However, the key fact is that Farm Fresh Produce bought the apples in the ordinary course of its own business, and there is no indication that Farm Fresh Produce knew the sale was not in the ordinary course of Orchard Goods Inc.’s business. Therefore, Farm Fresh Produce takes the apples free of AgriBank’s security interest.

The scenario involves a purchase money security interest (PMSI) in inventory. In Arkansas, under UCC § 9-324(b), a PMSI in inventory has priority over a conflicting security interest in the same inventory if certain conditions are met. First, the PMSI must have been perfected when the debtor received possession of the inventory. Second, the secured party must have given an authenticated notification to any holder of a conflicting security interest that was perfected *before* the filing of the PMSI. This notification must state that the PMSI holder expects to acquire a PMSI in inventory of the debtor, including after-acquired inventory. The notification must be sent within six months before the debtor receives possession of the inventory. In this case, AgriBank’s security interest was perfected on January 15th. Harvest Finance’s PMSI was perfected on February 1st. Harvest Finance sent the required notification to AgriBank on January 10th, which is within the six-month window before the debtor received possession of the inventory (which is implied to be around the time of perfection). Therefore, Harvest Finance’s PMSI has priority over AgriBank’s earlier perfected security interest in the inventory.

The scenario involves a purchase money security interest (PMSI) in inventory. In Arkansas, as under the general provisions of UCC Article 9, a PMSI holder in inventory must satisfy two primary requirements to maintain priority over other secured parties and buyers: (1) the PMSI must be perfected by filing a financing statement, and (2) the PMSI holder must give an Article 9 “notification” to any previously perfected secured party whose security interest covers the same inventory. This notification must be sent before the debtor receives possession of the inventory. The notification requirement under UCC § 9-324(b) is crucial for inventory PMSIs because inventory is constantly changing, and a prior secured party might have a security interest in after-acquired inventory. The notification informs the prior secured party that a new, competing PMSI is about to be established in that inventory, allowing them to monitor their position. In this case, while Acme Corp perfected its PMSI by filing, it failed to provide the required notification to First National Bank, which had a prior perfected security interest in all of the debtor’s inventory, including after-acquired inventory. Therefore, First National Bank retains its priority over Acme Corp’s security interest in the inventory that was subject to First National Bank’s prior claim. The notification is not about the debtor’s financial status but about the existence of the PMSI in the specific collateral.

The scenario involves a secured party, Agri-Lending Solutions, which has a perfected security interest in a farmer’s crops and equipment. The farmer defaults on the loan. The key issue is the priority of Agri-Lending Solutions’ security interest against a subsequent buyer of the crops. Under Arkansas law, specifically Arkansas Code § 4-9-320, 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. However, this protection does not extend to a buyer of farm products from a person engaged in farming operations. The farmer is engaged in farming operations, and the buyer, “Fresh Harvest Produce,” is purchasing crops directly from this farmer. Therefore, Fresh Harvest Produce does not take the crops free of Agri-Lending Solutions’ security interest. Agri-Lending Solutions can repossess the crops from Fresh Harvest Produce. The other options are incorrect because they misapply the BIOC exception or ignore the specific exclusion for farm products. A buyer of farm products from a farmer is not protected by the BIOC rule from a perfected security interest in those farm products.

In Arkansas, a purchase money security interest (PMSI) in inventory generally requires both attachment and perfection to have priority over a prior secured party. For inventory, perfection must occur by filing a financing statement and, in most cases, by possession or control, although the UCC allows for perfection by filing alone for inventory. However, the critical element for priority against a prior perfected secured party who also has a security interest in after-acquired inventory is that the PMSI holder must have filed a financing statement *before* the debtor receives possession of the inventory. Furthermore, the financing statement must describe the inventory and any identifiable proceeds. If the PMSI holder files after the debtor receives possession, they will likely be subordinate to the prior secured party’s interest in that inventory, unless the prior secured party has waived its rights or the UCC provides a specific exception. The Arkansas UCC, following the general principles of Article 9, emphasizes timely filing and proper notice to establish priority for PMSI in inventory. The notification requirement to other secured parties with a security interest in the same collateral is also a key aspect of establishing priority for PMSI in inventory, ensuring they are aware of the new PMSI.

The scenario describes a situation where a lender, “Ozark Capital,” has a security interest in inventory and accounts receivable of a debtor, “Riverbend Manufacturing,” located in Arkansas. Riverbend Manufacturing has filed for bankruptcy. The question probes the priority of Ozark Capital’s security interest against a statutory lien for unpaid ad valorem property taxes in Arkansas. Arkansas law, specifically Ark. Code Ann. § 26-35-101, establishes that taxes on real and personal property are a lien upon the property assessed. This lien is generally considered superior to most other claims, including previously perfected security interests, unless specific exceptions apply. While Article 9 of the UCC addresses perfection and priority of security interests, statutory liens created by other state laws often have their own priority rules. In Arkansas, property tax liens are typically given super-priority. Therefore, the ad valorem property tax lien would likely take precedence over Ozark Capital’s perfected security interest in the inventory and accounts receivable. The perfection of Ozark Capital’s security interest under Article 9 is relevant for priority against other secured parties and unsecured creditors, but statutory tax liens often operate outside of these Article 9 priority rules, being governed by the specific taxing statutes.

The scenario involves a purchase money security interest (PMSI) in inventory. In Arkansas, as governed by UCC Article 9, a secured party claiming a PMSI in inventory must satisfy two primary requirements to ensure its security interest has priority over other creditors, including previously perfected security interests. First, the security interest must be perfected by filing a financing statement. Second, the secured party must give notification in accordance with Arkansas Code Annotated § 4-9-324(c) to any other secured party whose previously filed financing statement covers the inventory. This notification must be sent before the debtor receives possession of the inventory. The notification must state that the secured party expects to acquire a PMSI in inventory of the debtor and describe the inventory. In this case, Magnolia Motors perfected its security interest in all of Delta Auto Sales’ inventory by filing a financing statement on January 15th. Riverfront Bank subsequently acquired a PMSI in new inventory purchased by Delta Auto Sales. To gain priority over Magnolia Motors’ earlier-filed security interest, Riverfront Bank needed to file its financing statement and provide the required notification to Magnolia Motors before Delta Auto Sales received the new inventory. Riverfront Bank filed its financing statement on February 1st and sent the notification to Magnolia Motors on February 5th, after Delta Auto Sales had already received the inventory on February 3rd. Therefore, Riverfront Bank’s notification was untimely, and its PMSI in the new inventory does not have priority over Magnolia Motors’ existing perfected security interest.

This question tests the understanding of the priority rules in Arkansas secured transactions when a purchase-money security interest (PMSI) is involved, specifically concerning inventory. Under Arkansas Code § 4-9-324(b), a PMSI in inventory has priority over a conflicting security interest in the same inventory if certain conditions are met. These conditions include: the PMSI must be perfected when the debtor receives possession of the inventory; the PMSI financier must give an authenticated notification to any holder of a conflicting security interest in the inventory before the debtor receives possession of the inventory; and the notification must state that the debtor has acquired or will acquire inventory on which the PMSI financier has or will acquire a security interest. The conflicting secured party is the one who has filed a financing statement covering the same inventory. In this scenario, “Farm Equipment Financing” (FEF) has a PMSI in the new tractor inventory. “Ozark Bank” has a prior perfected security interest in all of the debtor’s existing and future inventory. For FEF’s PMSI to have priority over Ozark Bank’s earlier perfected security interest in the same inventory, FEF must perfect its security interest and send the required notification to Ozark Bank before the debtor receives possession of the inventory. The problem states FEF perfected its security interest on March 1st and sent the notification to Ozark Bank on March 5th. The debtor received possession of the inventory on March 10th. Since the notification was sent *after* the debtor received possession of the inventory, FEF fails to meet the requirements of Arkansas Code § 4-9-324(b) for establishing PMSI priority over the existing perfected security interest. Therefore, Ozark Bank retains its priority.

The core of this question revolves around the concept of attachment and perfection of a security interest under Arkansas’s version of UCC Article 9. Attachment occurs when a security interest becomes enforceable against the debtor. This requires value to be given, the debtor to have rights in the collateral, and a security agreement to be in place, which typically means the debtor authenticating a security agreement describing the collateral. Perfection, on the other hand, is what makes the security interest effective against third parties. For inventory, perfection is generally achieved by filing a financing statement. However, there’s a specific rule for “after-acquired property” clauses in security agreements, which are common. If a security agreement grants a security interest in “all inventory now owned or hereafter acquired,” the security interest attaches to newly acquired inventory when the debtor obtains rights in it, provided the other attachment requirements are met. Perfection of the security interest in the after-acquired inventory relates back to the date of the initial filing, as long as the financing statement adequately covers the collateral, including the after-acquired aspect. Therefore, when FarmCo acquires new inventory of soybeans in Arkansas after the initial filing, its security interest in that new inventory is already perfected by virtue of the initial filing, assuming the financing statement was properly filed and described the collateral broadly enough to encompass after-acquired inventory. No new filing is required for each subsequent acquisition of inventory under the after-acquired property clause. The initial filing provides notice to the world regarding the security interest in the evolving inventory.

The core of this question lies in understanding the priority rules for conflicting security interests under Arkansas UCC Article 9, specifically when a purchase money security interest (PMSI) is involved. A PMSI grants the secured party special priority if certain conditions are met. In this scenario, “Farm Equipment Financing LLC” has a PMSI in the tractor, which was perfected by filing a financing statement before the debtor took possession. “Ozark Bank” has a previously perfected security interest in all of the debtor’s equipment, including after-acquired property. Under Arkansas Code § 4-9-324, a PMSI in equipment generally has priority over a conflicting security interest in the same equipment if the PMSI is perfected by filing no later than 20 days after the debtor receives possession of the collateral. Here, Farm Equipment Financing LLC filed its financing statement on July 15th, and the debtor took possession of the tractor on July 10th. This filing falls within the 20-day grace period. Therefore, Farm Equipment Financing LLC’s PMSI in the tractor takes priority over Ozark Bank’s earlier perfected general security interest. The fact that Ozark Bank’s security interest attached first and was perfected does not overcome the superpriority granted to a properly perfected PMSI. The question tests the application of these priority rules in a practical scenario.