Problem.Location of filing and lapse

     Soccer Supply, Inc. (SS), distributes soccer equipment purchased from various manufacturers to retail outlets throughout the country. Its chief executive office is located in Kansas City, Kansas, it is incorporated under the laws of Iowa, and the warehouse in which it stores inventory pending resale is located in Cleveland, Ohio.  

     SS finances acquisition of its inventory from manufacturers through a line of credit from Bank of Kansas, a bank whose branch locations are located throughout the state of Kansas.  The line of credit is secured by a security interest in all inventory and accounts of SS, including after acquired inventory and accounts.

     A. The secured party should consult Article 9 of which state to determine how to perfect its security interest in the inventory?  In the accounts?  U.C.C. 9-301, 9-307, 9-102(a)(70).   Imagine that you have that state's version of the Commercial Code in front of you and that its version of section 9-501 is identical to U.C.C. 9-501.  Where in that state should the secured party file? 

     B. It is now five years and two months subsequent to the filing of the original financing statement in the correct location. The Bank of Kansas failed to file a continuation statement and the debtor has now defaulted.  When and where should the bank have filed its continuation statement and what is the consequence of its having failed to do so?  U.C.C. 9-515.  If Bank of Kansas had been represented by outside counsel in documenting the secured transaction, who bore responsibility for filing a continuation statement?   What should the bank do now? 

     C.  Given its failure to file a continuation statement, may the bank nonetheless repossess the inventory?  Notify account debtors to pay the bank?  U.C.C. 9-203(b), U.C.C. 9-515(c), U.C.C. 9-601(a), U.C.C. 9-607(a). 

     D.  Given its failure to file a continuation statement, what happens to the bank's security interest in the inventory if the debtor files a petition under Chapter 11 of the Bankruptcy Code after its default but prior to the bank either repossessing the inventory or filing a new financing statement?   Bkry Code 544(a)(1); Commentary.Avoiding liens in bankruptcy.  What happens to the bank's security interest in the inventory if the debtor files its Chapter 11 petition a few days after the bank files a new financing statement or reposseses the inventory?  U.C.C. 9-313(a); Bkry Code 547; Commentary.Avoiding liens in bankruptcy.