Problem.Events subsequent to filing

     A.  Name Change:  In January, Bank of Bambino entered into a security agreement with the Cooperstown Bat Corporation (incorporated in New York), a manufacturer of baseball bats, taking a security interest in all of Cooperstown’s inventory, accounts receivable, and equipment, then existing and thereafter acquired. The security agreement included a promise by the debtor to notify the bank of any changes in its name, its organization, its location, or the location of the collateral, and a promise by the debtor not to sell any of its equipment without the prior written consent of the bank. The security agreement also provided that breach of such promises (as well as default in payments) would constitute a default. The bank filed a sufficient and effective financing statement in the filing office designated by section 9-501 of the New York Commercial Code.  

     On March 1, without notifying Bank of Bambino, the debtor changed its name to Hall of Fame Bat Corporation, through an amendment to its articles of incorporation.  About the same time, the Bank of Bambino merged with the Bank of Ruth and assigned all of its assets, including the note and security agreement from Cooperstown Bat Corporation, to the Bank of Ruth. The Bank of Ruth either did not discover the name change or, having discovered the name change, failed to file a new financing statement under the name Hall of Fame Bat Corporation. 

     In November, the Hall of Fame Bat Corporation filed a petition under Chapter 11 of the Bankruptcy Code.  At that time of the filing of the petition, it owed the bank $100,000. Its equipment, all of which it owned in January, is worth $50,000. Its inventory, 80% of which has been manufactured since July 1, is worth $50,000, and its accounts receivable, 80% of which have been generated since July 1, are worth $25,000.  May the debtor-in-possession avoid some or all of the bank's security interest?  If yes, what is the amount of the bank's allowed secured claim and allowed unsecured claim?  U.C.C. 9-310(c), U.C.C. 9-507(b), (c), U.C.C. 9-506, Bkry Code 544(a)(1), Commentary.Avoiding liens in bankruptcy.  How useful to the Bank of Ruth were the provisions in the security agreement with Cooperstown Bat Corporation that required Cooperstown to notify the Bank of Bambino about a change in name and that made failure to give such notice a default?

     B.  Transfer of collateral without authorization:   On March 1, instead of changing its name, Cooperstown Bat Corporation sold $25,000 worth of its bat making equipment to the Fullacork Bat Corporation (also incorporated in New York) without the consent of the bank.  Will the security interest of the Bank of Ruth continue in the equipment?  Will the security interest of Bank of Ruth continue perfected?  For how long?   Suppose that Fullacork Bat Corporation offers the equipment as collateral for a loan.  Under whose name or names should the prospective lender search for a financing statement?  How would your answers to the preceding questions change, if at all, if Fullacork is incorporated in a state other than New York?  U.C.C. 9-315(a)(1), U.C.C. 9-507(a), U.C.C. 9-316(a)(3), (b), U.C.C. 9-102(a)(28)(A), Official Comment 3 to U.C.C. 9-507, U.C.C. 1-201(32), (33), (44).    

     C.  New location or "new debtor":  Bill Carder, an avid golfer and California resident, started making putters in his garage and giving them to friends.   The putters were so successful that Bill began to sell his putters, doing business under the fictitious business name of Perfect Putters.  To finance continued growth of his business, Bill obtained a loan from Chuck Mesirow, one of his wealthy playing partners.  Mesirow secured the loan with a security interest in Bill's equipment, inventory, accounts, and after-acquired inventory and accounts, and perfected the security interest with a sufficient and effective filing in the correct location.  How should the financing statement filed by Mesirow list the debtor's name?  U.C.C. 9-502(a), U.C.C. 9-503.  

     On March 1, Bill moved to New York where he continued his business.  Does Mesirow need to file a new financing statement?  What is the consequence if Mesirow does not file a new financing statement.  9-316(a)(2), (b).

     Assume that instead of moving to New York, on March 1, Bill incorporated in California under the name Perfect Putters, Inc. He transferred all his putter related assets to Perfect Putters, Inc. and assigned all of his putter related liabilties, including the obligation to Mesirow, to Perfect Putters, Inc.  Does Mesirow need a new security agreement with Perfect Putters, Inc.?  Does Mesirow need to file a new financing statement?   What if Bill incorporated in Delaware under the name Perfect Putters, Inc?  U.C.C. 9-102(a)(56), 9-203(d), (e), 9-508, 9-507(a), 9-316(a)(3), (b).