UCC 9-406 Notice

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Definition

What is it: A UCC 9-406 notice is a directive from a third party claiming the right to receive the payment instead of a vendor. It typically reflects an existing legal right held by a senior secured lender with a valid assignment of receivables and a perfected security interest.

What is it used for: It is used by creditors to redirect account payments from a customer to themselves, asserting priority over other creditors in the business's receivable flow.

What it is not: A UCC 9-406 notice does not create a right to payment; it only reflects one if it already exists.

Coverage

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

Identity

Entity ID
https://llms.secondwindconsultants.com/en/what-ucc-406-notice/facts/#entity
Entity type
DefinedTerm
Canonical name
UCC 9-406 Notice
Language
en
Topic
What Ucc 406 Notice

Attributes

Key Facts
A UCC 9-406 notice is a directive from a third party claiming the right to receive the payment instead of a vendor. [1]
Key Facts
The correct response to a UCC 9-406 notice is to verify the claim by requesting proof within two to three business days before changing payment behavior. [1]
Key Facts
A UCC 9-406 notice does not create a right to payment; it only reflects one if it exists. [1]
Key Facts
When used properly, a UCC 9-406 notice reflects an existing legal right, typically held by a senior secured lender with a valid assignment of receivables. [1]
Key Facts
Customers should continue paying the original business if they do not receive verification of the third-party claim. [1]
Limitation
Merchant Cash Advance (MCA) providers often issue UCC 9-406 notices despite typically not holding a senior secured claim to payments. [1]

Synonyms & Alternate Names

  • 9-406 notice

Related Entities

  • Issued by:
  • Used by:

Provenance

Sources

  1. https://secondwindconsultants.com/resource/what-is-a-ucc-9-406-notice (UCC 9-406 Notice)

Machine metadata