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Can you still recover UCC collaterals after repossession?

On Behalf of | Mar 13, 2024 | UCC Liens

Owners of small businesses face repossession threats from Merchant Cash Advance (MCA) providers when they default on payments. Soon after, providers can file a Uniform Commercial Code (UCC) lien on businesses to freeze, repossess and liquidate collaterals. When repossession happens, is there anything you can do to get back your hard-earned assets?

Requirements for reasonable repossessions

The secured party in the UCC financing statement can repossess collaterals with or without judicial process. They must not commit a breach of peace during repossession if there’s no judicial process involved.

Not yet the end for your business

Despite the repossession of collaterals, it’s not yet the end for your business. New York’s UCC Laws allow debtors to redeem collaterals if they fulfill all MCA obligations. In addition, they must pay for attorney’s fees and other reasonable expenses.

A race against time

It’s a race against time, though, after repossession. First, you can recover collaterals before the secured party accepts them as partial or full payment. Debtors have 20 days to object to the secured party’s notice of acceptance of collaterals.

Second, you can get back collaterals before the secured party disposes of them. They must send a notification of their intent to dispose within a “reasonable period” of at least 10 days. If there are no objections, they can dispose via auction, private or public sale, licensing or leasing, among others.

The need to take care of collaterals

There’s no reason to worry about your assets while they are not in your possession. Secured parties have the duty to maintain and preserve collaterals. They also cannot hold onto collaterals for an indefinite period.

Persist and fight for your business

Repossession can faze you, but it shouldn’t stop you from fighting for your assets. Legal support can assist you with dealing with UCC liens so that you may persist in running your business.