Meaning
Legislative provisions in manufacturing states protect the builders of industrial moulds by granting them priority claims over the tooling they produce. The Michigan special tooling lien act allows toolmakers to record a lien on plastic injection moulds, dies, or forms to secure payment for engineering and fabrication work. This protection is designed to shield small-scale machine shops from the financial fallout of a prime contractor or moulding company going bankrupt.
Lien Recording
Filing a financing statement with the state department is the mandatory step to perfect a claim under this legislation. This filing must occur before the toolmaker surrenders possession of the mould, ensuring that their claim is visible to any bank or third-party creditor. Once recorded, the lien attaches to the mould, preventing the moulder from selling or transferring the asset without first satisfying the outstanding invoice.
Production Protection
Moulders running the tool are prevented from using or modifying the mould if the lien remains unaddressed, which can lead to significant supply chain blockages. This ensures that the high-precision mould, often representing hundreds of thousands of dollars in development costs, cannot be exploited to generate revenue for a defaulting buyer. If the dispute remains unresolved, the toolmaker can initiate a sale of the mould, transferring the asset and its production rights to a buyer who can pay for the underlying fabrication.
Because Michigan is a primary hub for automotive plastics, these provisions are frequently invoked when tier-one suppliers go into restructuring, making the toolmaker’s position a key factor in supply chain continuity.
Statutory Notice
Written notices must be sent to the debtor and any other secured parties before the mould can be seized or sold. This notice must include a detailed breakdown of the unpaid balance and a formal demand for payment. If the payment is not received within the designated timeframe, the toolmaker has the legal right to take possession of the tool and sell it to recover the outstanding balance.
