Two UCC Mistakes. Billions at Risk. Why Structured Finance Platforms Can’t Treat Perfection as “Back Office”
Structured finance transactions don’t usually fail because the economics are wrong. They fail because execution systems break down in small, incremental ways that only matter when it’s too late.
Few areas illustrate this better than UCC filings. They’re often viewed as mechanical, clerical, or purely legal — until a single lapse or mistake wipes out lien priority and creates losses measured in eight or nine figures.
Two cases in particular should be required reading for any structured finance deal team.
Case One: The Lapsed Filing That Cost Millions
In a healthcare-related structured finance transaction, an indenture trustee failed to properly maintain UCC perfection after changes affecting the debtor’s name. The result was not a missing document, but a broken chain of perfection.
When bankruptcy followed, the lien was challenged as unperfected. The dispute ultimately resulted in a settlement where bondholders paid millions of dollars to resolve the exposure.
Nothing about this outcome turned on credit quality or bad faith. It turned on execution discipline:
knowing what filings existed,
understanding when they needed to be amended or continued,
and ensuring someone actually owned that responsibility over time.
Case Two: The $1.5 Billion “Authorized” Termination
The more famous example is In re Motors Liquidation Co. (General Motors).
There, a major financial institution acted as administrative agent on a $1.5 billion secured term loan. During a later refinancing of a different facility, a UCC termination statement was prepared and filed that mistakenly terminated the lien securing the $1.5 billion loan.
Everyone agreed no one intended to release that lien.
It didn’t matter.
Because the institution had authorized the filing, the termination was effective under Article 9. When GM filed for bankruptcy, the lien was gone. A $1.5 billion secured position became unsecured overnight.
This wasn’t a documentation gap.
It was a process failure.
The Common Thread: Execution, Not Law
These cases are often taught as legal lessons, but that misses the point.
In both:
the law worked exactly as designed,
the documents existed,
and sophisticated parties were involved.
The failure was organizational:
no single source of truth for filings,
unclear ownership over the UCC lifecycle,
and insufficient controls around what was being filed, amended, or terminated.
In structured finance, loans and collateral don’t sit still. They move through:
forward flow and whole-loan purchases,
warehouse facilities,
term securitizations,
amendments, refinancings, and unwindings.
At each step, UCC filings change — sometimes subtly, sometimes materially. Without a system that tracks what filings exist, why they exist, and how they connect to transaction documents, risk compounds silently.
Why This Matters for Everyday Deal Teams
Most platforms don’t realize they have a UCC problem until:
an audit raises a question,
a trustee asks for confirmation,
a repurchase dispute arises,
or bankruptcy counsel starts pulling filings.
At that point, teams are forced to reconstruct years of activity under pressure.
Well-run structured finance platforms do something different:
They treat UCC perfection as core transaction infrastructure.
They understand how filings relate to deal documents.
They know which filings matter for which transactions.
And they have clear internal ownership over the entire lifecycle.
That’s what makes a platform look polished, credible, and prepared — not just compliant.
This Is Not About More Lawyers or More Paper
Avoiding these failures does not require:
more outside counsel,
thicker closing binders,
or reinventing your tech stack.
It requires:
clarity,
organization,
and disciplined execution.
Specifically:
knowing what liens exist across your platform,
understanding how they were perfected,
tracking when they need attention,
and ensuring changes are reviewed as risk events, not clerical steps.
How Structured Execution Helps
This is exactly where Structured Execution fits.
I work with structured finance platforms to:
organize and map UCC filings across transactions,
connect filings back to the underlying deal documents,
identify gaps, overlaps, and ownership issues,
and help teams design practical systems so perfection risk is managed intentionally, not reactively.
The goal isn’t academic perfection.
It’s avoiding the kind of quiet execution failure that only shows up when the stakes are highest.
If your platform has grown deal-by-deal — with filings handled “along the way” — these cases are a reminder that the risk is real, and the cost of getting it wrong is enormous.
If you want help making sure execution doesn’t become your weakest link, feel free to get in touch.
