This practice note addresses secured debt records and closing payment terms in a private acquisition. A financing statement is a notice record; a security interest is a property right. The quoted Uniform Commercial Code Article 9 text is Delaware law. Article 9 has a uniform structure, but enacted text differs by state. This note supplements Legal due diligence in a private acquisition.
Where are financing statements filed, and what must they contain?
Where Delaware law governs perfection, financing statements are filed with the Secretary of State unless they are the real-property-linked filings described in the next sentence . As-extracted collateral, timber to be cut, and fixture filings generally go to the related real-property mortgage office . A transmitting-utility filing instead goes to the Secretary of State, including when it covers fixtures . A financing statement is sufficient only if it names the debtor and the secured party or its representative and indicates the collateral . Real-property-related filings must also meet subsection (b)'s requirements, subject to its transmitting-utility exception . An initial financing statement may be filed only with the debtor's authorization, which signing or becoming bound by a security agreement supplies . An effective agricultural-lien holder has a separate route for collateral covered by that lien . A filed record is effective only to the extent an entitled person filed it . A wrongly refused record tendered with the fee is effective as a filed record, except against a purchaser of the collateral that gives value in reasonable reliance on the record's absence from the files .
Sources for this answer
Where Delaware law governs perfection, real-property-linked collateral is filed in the mortgage office and other financing statements are filed with the Secretary of State, subject to the transmitting-utility rule.
(a) Filing offices. — Except as otherwise provided in subsection (b), if the local law of this State governs perfection of a security interest or agricultural lien, the office in which to file a financing statement to perfect the security interest or agricultural lien is: (1) the office designated for the filing or recording of a record of a mortgage on the related real property, if: (A) the collateral is as-extracted collateral or timber to be cut; or (B) the financing statement is filed as a fixture filing and the collateral is goods that are or are to become fixtures; or (2) the office of the Secretary of State, in all other cases, including a case in which the collateral is goods that are or are to become fixtures and the financing statement is not filed as a fixture filing.
See 6 Del. C. § 9-501(a) (2026) (U.C.C. § 9-501).
A financing statement covering a transmitting utility's collateral, including fixtures, is filed with the Secretary of State.
(b) Filing office for transmitting utilities. — The office in which to file a financing statement to perfect a security interest in collateral, including fixtures, of a transmitting utility is the office of the Secretary of State. The financing statement also constitutes a fixture filing as to the collateral indicated in the financing statement which is or is to become fixtures.
See 6 Del. C. § 9-501(b) (2026) (U.C.C. § 9-501).
Subject to subsection (b), a financing statement is sufficient only if it names the debtor and secured party or representative and indicates the collateral.
(a) Sufficiency of financing statement. — Subject to subsection (b), a financing statement is sufficient only if it: (1) provides the name of the debtor; (2) provides the name of the secured party or a representative of the secured party; and (3) indicates the collateral covered by the financing statement.
See 6 Del. C. § 9-502(a) (2026) (U.C.C. § 9-502).
Real-property-related financing statements must also satisfy the further requirements in subsection (b), subject to the transmitting-utility rule.
(b) Real property-related financing statements. — Except as otherwise provided in Section 9-501(b), to be sufficient, a financing statement that covers as-extracted collateral or timber to be cut, or which is filed as a fixture filing and covers goods that are or are to become fixtures, must satisfy subsection (a) and also: (1) indicate that it covers this type of collateral; (2) indicate that it is to be filed in the real property records; (3) provide a description of the real property to which the collateral is related sufficient to give constructive notice of a mortgage under the law of this State if the description were contained in a record of the mortgage of the real property; and (4) if the debtor does not have an interest of record in the real property, provide the name of a record owner.
See 6 Del. C. § 9-502(b) (2026) (U.C.C. § 9-502).
An initial financing statement ordinarily requires debtor authorization; an effective agricultural-lien holder may also file for collateral covered by that lien.
(a) Person entitled to file record. — A person may file an initial financing statement, amendment that adds collateral covered by a financing statement, or amendment that adds a debtor to a financing statement only if: (1) the debtor authorizes the filing in a signed record or pursuant to subsection (b) or (c); or (2) the person holds an agricultural lien that has become effective at the time of filing and the financing statement covers only collateral in which the person holds an agricultural lien.
See 6 Del. C. § 9-509(a) (2026) (U.C.C. § 9-509).
Signing or becoming bound by a security agreement authorizes filing covering its collateral and specified proceeds.
(b) Security agreement as authorization. — By signing or becoming bound as debtor by a security agreement, a debtor or new debtor authorizes the filing of an initial financing statement, and an amendment, covering: (1) the collateral described in the security agreement; and (2) property that becomes collateral under Section 9-315(a)(2), whether or not the security agreement expressly covers proceeds.
See 6 Del. C. § 9-509(b) (2026) (U.C.C. § 9-509).
A filed record is effective only to the extent filed by a person entitled to file it under § 9-509.
(a) Filed record effective if authorized. — A filed record is effective only to the extent that it was filed by a person that may file it under Section 9-509.
See 6 Del. C. § 9-510(a) (2026) (U.C.C. § 9-510).
A record communicated to the filing office with tender of the fee, but refused for a reason other than those the section allows, is effective as a filed record except against a purchaser of the collateral that gives value in reasonable reliance on the record's absence from the files.
(d) Refusal to accept record; record effective as filed record. — A record that is communicated to the filing office with tender of the filing fee, but which the filing office refuses to accept for a reason other than one set forth in subsection (b), is effective as a filed record except as against a purchaser of the collateral which gives value in reasonable reliance upon the absence of the record from the files.
See 6 Del. C. § 9-516(d) (2026) (U.C.C. § 9-516).
When does a financing statement lapse?
A financing statement generally lasts five years, subject to the stated exceptions . An indicated public-finance or manufactured-home initial filing lasts thirty years, subject to subsections (e), (f) and (g) . A continuation may be filed only in the six months before the applicable period ends . A timely continuation extends the statement's effectiveness for five years from the date it otherwise would have become ineffective . On lapse, the financing statement ceases to be effective, and the security interest survives but becomes unperfected unless perfected otherwise . Against a purchaser of the collateral for value, an interest unperfected on lapse is deemed never perfected . An indicated transmitting-utility filing remains effective until termination .
Sources for this answer
A filed financing statement generally lasts five years. A public-finance or manufactured-home initial filing that so indicates lasts thirty years, subject to subsections (e), (f) and (g).
(a) Five-year effectiveness. — Except as otherwise provided in subsections (b), (e), (f), and (g), a filed financing statement is effective for a period of five years after the date of filing. (b) Public-finance or manufactured-home transaction. — Except as otherwise provided in subsections (e), (f), and (g), an initial financing statement filed in connection with a public-finance transaction or manufactured-home transaction is effective for a period of 30 years after the date of filing if it indicates that it is filed in connection with a public-finance transaction or manufactured-home transaction.
See 6 Del. C. § 9-515(a), (b) (2026) (U.C.C. § 9-515).
A continuation statement may be filed only within the six months before the applicable five-year or thirty-year period expires.
(d) When continuation statement may be filed. — A continuation statement may be filed only within six months before the expiration of the five-year period specified in subsection (a) or the 30-year period specified in subsection (b), whichever is applicable.
See 6 Del. C. § 9-515(d) (2026) (U.C.C. § 9-515).
A timely continuation continues the initial financing statement's effectiveness for five years from when it otherwise would have become ineffective, with further timely continuations permitted.
(e) Effect of filing continuation statement. — Except as otherwise provided in Section 9-510, upon timely filing of a continuation statement, the effectiveness of the initial financing statement continues for a period of five years commencing on the day on which the financing statement would have become ineffective in the absence of the filing. Upon the expiration of the five-year period, the financing statement lapses in the same manner as provided in subsection (c), unless, before the lapse, another continuation statement is filed pursuant to subsection (d). Succeeding continuation statements may be filed in the same manner to continue the effectiveness of the initial financing statement.
See 6 Del. C. § 9-515(e) (2026) (U.C.C. § 9-515).
On lapse the financing statement ceases to be effective and a security interest perfected by it becomes unperfected unless perfected otherwise; the security interest itself is not extinguished, but as against a purchaser of the collateral for value it is deemed never to have been perfected.
(c) Lapse and continuation of financing statement. — The effectiveness of a filed financing statement lapses on the expiration of the period of its effectiveness unless before the lapse a continuation statement is filed pursuant to subsection (d). Upon lapse, a financing statement ceases to be effective and any security interest or agricultural lien that was perfected by the financing statement becomes unperfected, unless the security interest is perfected otherwise. If the security interest or agricultural lien becomes unperfected upon lapse, it is deemed never to have been perfected as against a purchaser of the collateral for value.
See 6 Del. C. § 9-515(c) (2026) (U.C.C. § 9-515).
A filing indicating the debtor is a transmitting utility remains effective until a termination statement is filed.
(f) Transmitting utility financing statement. — If a debtor is a transmitting utility and a filed initial financing statement so indicates, the financing statement is effective until a termination statement is filed.
See 6 Del. C. § 9-515(f) (2026) (U.C.C. § 9-515).
When does a signed demand require termination?
In cases § 9-513(a) does not govern, a secured party that receives a signed debtor demand must, within twenty days, cause a termination statement to be sent to the debtor or filed if one of the conditions listed in the next sentence applies . The conditions are that no obligation is secured and there is no commitment to give further value, except for sold accounts or chattel paper and consigned goods; that sold accounts or chattel paper have been discharged by the account debtor or other obligated person; that consigned goods are not in the debtor's possession; or that the debtor did not authorize the initial filing .
Sources for this answer
For other collateral, a signed debtor demand starts a twenty-day duty to send or file a termination when no obligation remains secured and no commitment to give further value remains, subject to the stated exceptions for sold accounts or chattel paper and consigned goods.
(c) Other collateral. — In cases not governed by subsection (a), within 20 days after a secured party receives a signed demand from a debtor, the secured party shall cause the secured party of record for a financing statement to send to the debtor a termination statement for the financing statement or file the termination statement in the filing office if: (1) except in the case of a financing statement covering accounts or chattel paper that has been sold or goods that are the subject of a consignment, there is no obligation secured by the collateral covered by the financing statement and no commitment to make an advance, incur an obligation, or otherwise give value; (2) the financing statement covers accounts or chattel paper that has been sold but as to which the account debtor or other person obligated has discharged its obligation; (3) the financing statement covers goods that were the subject of a consignment to the debtor but are not in the debtor’s possession; or
See 6 Del. C. § 9-513(c)(1)-(3) (2026) (U.C.C. § 9-513).
An initial filing not authorized by the debtor independently triggers the termination duty following a signed demand.
(1) except in the case of a financing statement covering accounts or chattel paper that has been sold or goods that are the subject of a consignment, there is no obligation secured by the collateral covered by the financing statement and no commitment to make an advance, incur an obligation, or otherwise give value; (2) the financing statement covers accounts or chattel paper that has been sold but as to which the account debtor or other person obligated has discharged its obligation; (3) the financing statement covers goods that were the subject of a consignment to the debtor but are not in the debtor’s possession; or (4) the debtor did not authorize the filing of the initial financing statement.
See 6 Del. C. § 9-513(c)(1)-(4) (2026) (U.C.C. § 9-513).
What does a termination establish about payoff?
Under § 9-513(d), a filed termination has one stated effect: the financing statement ceases to be effective . The provision does not address payment of the debt or release of the security interest. The termination has that effect only if a person entitled to file it under § 9-509 filed it .
Sources for this answer
Except as § 9-510 provides, and so only where the termination statement was filed by a person entitled to file it under § 9-509, the filing of a termination statement makes the related financing statement cease to be effective. The provision speaks to the effectiveness of the filing and not to the existence of the underlying security interest or the underlying debt.
(d) Effect of filing termination statement. — Except as otherwise provided in Section 9-510, upon the filing of a termination statement with the filing office, the financing statement to which the termination statement relates ceases to be effective. Except as otherwise provided in Section 9-510, for purposes of Sections 9-519(g), 9-522(a), and 9-523(c), the filing with the filing office of a termination statement relating to a financing statement that indicates that the debtor is a transmitting utility also causes the effectiveness of the financing statement to lapse.
See 6 Del. C. § 9-513(d) (2026) (U.C.C. § 9-513).
A filed record is effective only to the extent filed by a person entitled to file it under § 9-509.
(a) Filed record effective if authorized. — A filed record is effective only to the extent that it was filed by a person that may file it under Section 9-509.
See 6 Del. C. § 9-510(a) (2026) (U.C.C. § 9-510).
How do prepayment costs enter the closing debt definition?
Prepayment costs enter closing debt when the purchase agreement's indebtedness definition reaches prepayment premiums and similar charges on the listed indebtedness that either must be paid at signing or closing or become due solely as a result of signing or closing . The diligence questions are what the credit agreement charges on a change-of-control prepayment and which purchase-agreement definition captures that charge.
Sources for this answer
Section 8.1 of the filed stock purchase agreement defines Indebtedness to include, in clause (p), accrued interest and change-of-control, prepayment, premium, charge or similar penalties and fees payable at the time of, or solely as a result of, execution or closing.
(p) with respect to clauses (a) through (o), any interest accrued thereon and any change of control, prepayment, premium, charge or similar penalties and fees and expenses with respect to any indebtedness that are required to be paid at the time of, or the payment of which would become due and payable solely as a result of, the execution of this Agreement or the consummation of the Contemplated Transactions.
See Stock Purchase Agreement § 8.1 (definition of "Indebtedness," cl. (p)), at 65 (Ex. 2.1), Acacia Research Corp., Current Report (Form 8-K), SEC Accession No. 0001104659-24-110071 (Oct. 21, 2024).