Bank Loses Collateral for Not Complying with State Law

In Brief:

In a recent Nebraska case,¹ a bank lost its claim to collateral (an automobile) because it failed to comply with state law governing the perfection of security interests in automobiles. In Nebraska, the bankruptcy code specifies that the process for perfecting liens as laid out in the Uniform Commercial Code (UCC) does not apply in bankruptcy.

The Facts:

The debtor, Mattes, bought a c…