Question

Gidgits Galore has borrowed $10,000 to buy new shelves to display its millennial version of the gidgit. The bank negotiated the use 1,000 gidgits as

collateral and then filed a UCC-1 Financing Statement with the Register of Deeds where Gidgits Galore has its headquarters. The bank is an
unsecured creditor.
O True
O False

Answer 1

False. The bank is NOT an unsecured creditor.

Step-by-step explanation:

An unsecured creditor can be described as an individual or institution that lends money without requiring the borrower to put up any assets as collateral.

Financing Statement is a statement that a creditor files to notify interested parties that he has a security interest in a personal property of a debtor. The personal property is therefore held as collateral in a secured transaction, such as a loan or a lease.

Since the bank negotiated the use 1,000 gidgits as collateral and then filed a UCC-1 Financing Statement with the Register of Deeds where Gidgits Galore has its headquarters, it implies that the bank is a secured creditor.

Therefore, the bank is NOT an unsecured creditor.