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A recent bankruptcy opinion delivers welcome news for secured creditors: Even if a financing statement lapses, a creditor can re-perfect its security interest by filing a new financing statement—so long as the underlying security agreement provides the authorization to do so.
In this case, a dairy farmer obtained credit facilities from the creditor's predecessor-in-interest in 2009 and 2010, securing the loans with agricultural liens. The creditor's predecessor had filed financing statements, which, at the time, were valid for ten years. But when the successor lender acquired the loan in 2017, it filed amendments to reflect the assignment, but did not file continuation statements before the financing statements expired. After realizing the financing statements had lapsed, the lender filed new financing statements in June of 2021.
The debtor later filed for Chapter 12 bankruptcy and challenged the lender's roughly $1 million secured claim, arguing that the lender improperly filed a new financing statement without the debtor's consent after the original statements had lapsed. The debtor contended that the 2021 financing statement was invalid, and thus the creditor was unsecured.
The bankruptcy court disagreed, holding that the security agreements between the parties explicitly authorized the creditor to "execute and file on its own with the Department of State … a continuation statement" as well as "any other statement permitted by the Commercial Transactions Law … at any time it deems appropriate." The Court concluded that this broad language authorized the creditor to file a brand-new financing statement after the original one expired—not merely a continuation statement.
The ruling underscores the critical importance of the authorization language in security agreements. Creditors should ensure that security agreements explicitly grant them the authority to file financing statements, continuation statements, and "any other" filings permitted by applicable law at any time and without debtor consent.
The decision is In re Eschevarria, 24-01404 (Bankr. D. Puerto Rico Feb. 5, 2026).
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