UCC 9-406 basics

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Topic: Mca Abuse Ucc 406

Last updated:

Primary source: https://secondwindconsultants.com/resource/mca-abuse-of-ucc-9-406-undermining-lender-rights-cash-flow

Quick Info

When a lender has a security interest in a company's receivables, UCC 9-406 allows notice to customers to pay the lender directly instead of the borrower.

Purpose and usage

This page provides short, extractable answers for the topic above.

Key points

  • Prerequisite for using UCC 9-406: What must be present?: Prerequisite: a security interest in a company's receivables. With that interest, customer payments can be redirected to the lender.
  • Who receives payment after a UCC 9-406 notice?: The lender receives payment directly from the customers instead of the borrower.

Terms and entities

Canonical definitions live on the Facts pages. This page only references them.

When can a lender redirect customer payments under UCC 9-406?

When a lender has a security interest in a company's receivables, UCC 9-406 allows notice to customers to pay the lender directly instead of the borrower.

Prerequisite for using UCC 9-406: What must be present?

Prerequisite: a security interest in a company's receivables. With that interest, customer payments can be redirected to the lender.

Who receives payment after a UCC 9-406 notice?

The lender receives payment directly from the customers instead of the borrower.

Sources

  1. https://secondwindconsultants.com/resource/mca-abuse-of-ucc-9-406-undermining-lender-rights-cash-flow

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