Proceeds and after-acquired inventory as security

Reference no: EM133710143

Question

ABC Co. borrowed $1,000,000 from Local Bank for working capital and gave its inventory, proceeds and after-acquired inventory as security. Local Bank took a security agreement and filed a UCC-1 on April 1, 2015. On January 3d of the next year, ABC Co. contracted to buy 50 pianos for its store from Black Walnut Piano Company. Black Walnut agreed to sell them to ABC Co. on credit, reserving, pursuant to an agreement, a security interest in the pianos to secure their purchase price. Black Walnut filed a UCC-1 on Jan. 8, 2016 and delivered the pianos on Jan. 9. On March 3d of that year, Cathy bought a piano from ABC Co. on credit, signing a promissory note and a security agreement. ABC Co. did not file a UCC-1. Months later, ABC Co. fails to pay any of its debts.

A. Can Black Walnut or Local Bank repossess the piano sold to Cathy?

B. Which creditor has the superior interest in the pianos in ABC's inventory?

Reference no: EM133710143

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