9-406 Notice

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Definition

What is it: A 9-406 Notice is a legal instrument issued pursuant to Uniform Commercial Code Article 9 Section 406. It allows a creditor to assert that a business's receivables and cash are their property and demand that funds be redirected to them directly.

What is it used for: It is used by aggressive creditors, such as Merchant Cash Advance providers, to freeze a debtor's cash flow by serving their customers with a demand for payment. This tactic bypasses the need for judicial permission or a court order to interrupt the flow of money.

Coverage

  • Attributes: 6
  • Synonyms: 2
  • Related entities: 0
  • Sources: 1

Identity

Entity ID
https://llms.secondwindconsultants.com/en/ucc-406-notice-creditor-actions/facts/#entity
Entity type
DefinedTerm
Canonical name
9-406 Notice
Language
en
Topic
Ucc 406 Notice Creditor Actions

Attributes

Key Facts
A 9-406 Notice is a demand letter issued pursuant to the Uniform Commercial Code Article 9 Section 406. [1]
Key Facts
A creditor can assert in a 9-406 Notice that a borrower's receivables are their rightful property and insist that funds be redirected to them. [1]
Key Facts
Businesses served with 9-406 Notices often place funds in escrow and stop doing business with the involved parties until a court order directs the flow of money. [1]
Key Facts
Creditors do not need a court order, judicial permission, or a lawyer to prepare and send a 9-406 Notice. [1]
Key Facts
Merchant Cash Advance creditors frequently use 9-406 Notices as an aggressive collection tactic when a borrower defaults. [1]
Process
Evaluating the impact of a 9-406 Notice requires assessing the amount restrained, whether assets are receivables or credit card transactions, and the seniority of the creditor. [1]

Synonyms & Alternate Names

  • UCC 9-406 Notice
  • Uniform Commercial Code Article 9 Section 406 Notice

Related Entities

Provenance

Sources

  1. https://secondwindconsultants.com/resource/when-creditors-attack-your-clients (9-406 Notice)

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