The primary purpose of a financing statement properly filed under the Uniform Commercial Code, ("UCC") is to notify all interested parties of an outstanding security interest in a debtor's personal property, and thereby perfect a creditor's lien against such property. Normally, the UCC requires the debtor's signature on the financing statement. Recently, however, the Bankruptcy Court for the Western District of Kentucky ruled that a creditor's signature on a financing statement covering equipment leased to a debtor is a legal and valid substitute for the debtor's signature, because the specific terms of the lease authorized the creditor to sign on behalf of the debtor.
In In re Grieb Printing Co. (March 1, 1999), the debtor's bankruptcy trustee argued that the lessor's signature on the financing statement rendered it invalid for perfecting the lessor's security interest. The Bankruptcy Court ruled against the trustee, and found that the equipment lease at issue granted the lessor a security interest, and authorized the lessor "to sign and execute on [debtor's] behalf any and all necessary documents" to effectuate the filing or continuation of any financing statement. No further authorization from the debtor/lessee and no request by lessor for the debtor/lessee to execute the financing statement was deemed necessary.
The Court in Grieb determined that no formal power of attorney in favor of the lessor was necessary. Moreover, the overriding purpose of the UCC (i.e. notice to interested parties of the security interest) is satisfied by a lessor's execution of the financing statement as authorized by the lease terms.
Equipment lessors and financers may still avoid unnecessary litigation with a debtor's bankruptcy trustee if the financing statement is executed by a debtor concurrently with a lease or financing agreement. However, specific language authorizing a creditor/lessor to sign a financing statement on behalf of its debtor without the pre-condition of requesting the debtor to sign can be a useful failsafe provision for renewal purposes when the debtor becomes uncooperative, or is difficult to locate.