Bank of America has a security interest in present and after-acquired equipment of Prince Rogers Nelson. Bank of America perfected the security agreement by filing a UCC-1 on April 1, 2007.
On March 1, 2012, Prince legally changed his name to Unpronounceable Symbol. Bank of America found out about the name change on June 1, 2012, at which point Bank of America purpoted to amend its original UCC-1 Filing to reflect the changed name so that its UCC-1 was no longer seriously misleading. Unpronounceable Symbol filed for bankruptcy on May 1, 2012.
Which statement is correct?
1. Since Bank of America didn't keep a close enough eye on The Debtor Formerly Known as Prince's activities (to know when he changed his name), its security interest in all of The Debtor Formerly Known as Prince's equipment acquired after the name change on March 1, 2012 will be unperfected and thus the bankruptcy trustee can set aside that security interest.
2. Because Bank of America amended its UCC-1 filing within 4 months of the name change, Bank of America retains priority over the bankruptcy trustee as to all of the collateral.
3. Because the bankruptcy trustee failed to use due diligence and search the UCC records for names previously used by Unpronounceable Symbol, it cannot set aside Bank of America's security interest in the equipment.
4. Because Bank of America failed to file a timely continuation statement, its perfection lapsed and the bankruptcy trustee can set aside Bank of America's security interest in the equipment.