Decorate his building with the equipment as collateral

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Reference no: EM131976744

You have a friend who is starting up a new business and needs money. You do a search and find out that he does not have any outstanding financing statements with his name on them, so you loan him money. You both sign a loan document that states that you will loan him several thousand dollars at a certain amount of interest, and that in return you will receive a security interest in the equipment he will purchase with the loaned funds. You immediately file a financing statement. Six months later, your friend informs you that he is closing his business and doesn’t have the cash to pay you back. He gives you the equipment he purchased. The next day, you receive a call from the local bank claiming that they loaned him money to decorate his building with the equipment as collateral. Explain whether or not you have top priority over the equipment.

Reference no: EM131976744

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