A prudent secured lender will want to know that its security interest is perfected and has first-priority status. If perfected, the lender is assured that its interest in the collateral is in most cases superior to any interest that may be claimed by other creditors of the borrower and, most importantly, that its interest will survive the borrower’s bankruptcy.
Having first-priority assures the lender not only that it is protected against the borrower’s trade creditors and any bankruptcy trustee, but that the lender will come ahead of any other creditor that perfected a security interest in the same collateral.
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