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.
Judicial Lien Creditor
Meaning
A claimant who has acquired a lien on the debtor’s property by attachment, levy, or judicial judgment holds a secured position in insolvency proceedings. The judicial lien creditor can enforce their claim against the assets of a distressed polymer processor, which may include raw resin, auxiliary equipment, or injection moulds. It gives the creditor the legal right to have the sheriff seize and sell the property to satisfy the unpaid judgment.
Legal Standing
Legal status as a secured claimant alters the balance of power during a custom moulder’s liquidation. Unlike unsecured trade creditors, the judicial lien creditor has a specific right to satisfy their debt from the proceeds of designated assets. This means that if the moulder owes money to a resin distributor, the distributor can obtain a court judgment and become a lienholder, which allows them to freeze the moulder’s bank accounts or inventory.
Claim Priority
The date of the lien establishes its priority relative to other claims. If a bank holds a prior perfected security interest in the same assets, the bank is paid first.
Property Execution
Executing the court order involves the physical seizure and auction of the debtor’s assets. During this process, the sheriff may attempt to lock down all equipment on the factory floor, including tools owned by the moulder’s customers. To prevent the loss of their property, the tool owner must intervene in court and prove their title before the judicial lien creditor can force a sale.