UCC Filing Procedures for Protecting Customer Owned Injection Moulding Tools
Protect customer injection molds by filing UCC-1 protective bailments and securing bank subordination waivers before placing steel at a supplier facility.
Bankruptcy Court Lien
Meaning
A legal encumbrance established by a judicial authority during insolvency proceedings secures the claims of creditors against the debtor’s remaining assets. The bankruptcy court lien grants a specific creditor a priority interest in the property of the bankrupt estate, such as injection moulding machinery or raw polymer inventories. It ensures that the creditor’s claim is satisfied before unsecured claims are paid from the proceeds of any asset sale.
Secured Interest
Secured status changes the dynamics of asset recovery for tool owners and resin suppliers. When a custom moulder enters bankruptcy, a creditor holding a bankruptcy court lien can prevent the removal of moulds or unused materials until ownership is verified. This legal hold can trap customer-owned tooling in the facility for months, disrupting production schedules.
To avoid this, tool owners must prove their ownership through pre-existing agreements and UCC filings.
Asset Protection
Proper documentation prevents the tooling from being treated as the debtor’s property. If the mould is not clearly marked and registered, the court may allow the lien to attach to it.
Liquidation Priority
The order of distribution determines which claims are paid during a liquidation. Creditors with a valid bankruptcy court lien stand at the front of the line, ahead of unsecured trade creditors and resin distributors. This priority ranking dictates how proceeds from the sale of compounding lines and auxiliary gear are distributed.