Sweetwater Café defaults on debts to Town & Country Bank and Uno Loan Company. Town & Country perfected its security interest before Uno. Town & Country takes possession of the collateral in which it has a security interest. On a sale of the collat?eral, the proceeds will be applied first to

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When a creditor takes possession of collateral on which they have a perfected security interest, they have the right to sell the collateral to satisfy the debt. The proceeds from the sale will be applied first to the balance of the debtor's debt to the creditor who has the perfected security interest. In this case, Town & Country has a perfected security interest before Uno and has taken possession of the collateral. Therefore, the proceeds from the sale will be applied first to the balance of Sweetwater's debt to Town & Country.

Sweetwater Café Defaults on Debts to Town & Country Bank