Fact Pattern 19-1
General Leasing Company (GLC) buys equipment for use as inventory,borrow-ing $1 million from Helpful Finance Corporation for a security in-terest in the equipment.The next day,GLC borrows $500,000 from Interstate Bank,also for a security interest in the equipment.GLC defaults on the loans.
-Refer to Fact Pattern 19-1.Suppose that Helpful perfects its se-curity in-ter-est when GLC takes possession of the equipment.In that cir-cum-stance,the party with pri-ority to the collateral on GLC's default would be
A)GLC
B)Helpful and Interstate proportionately.
C)Helpful only.
D)Interstate only.

Question

Quizplus · Accepted Answer

Since Helpful perfected its security interest before Interstate, it has priority over Interstate in the collateral. Therefore, Helpful would be the party with priority to the collateral on GLC's default.

Fact Pattern 19-1 General Leasing Company (GLC) Buys Equipment for Use as Inventory,borrow-Ing