Fact Pattern 32-1General Leasing Company (GLC) buys equipment for use as inventory, borrowing $1 million from Helpful Finance Corporation for a security interest 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 32-1.Suppose that Helpful perfects its security interest when GLC takes possession of the equipment.In that circumstance,the party with priority to the collateral on GLC's default would be

Question

Quizplus · Accepted Answer

When Helpful perfects its security interest upon GLC taking possession of the equipment, Helpful would have priority to the collateral on GLC's default as the first secured creditor. Interstate's security interest would be subordinate to Helpful's. Therefore, Helpful would be the only party with priority to the collateral.

Fact Pattern 32-1General Leasing Company (GLC) Buys Equipment for Use