Super Priority Notice Execution against Senior Lenders for Inventory Consignments
Super priority consignment notices must reach senior lenders before distributor gate receipt to defeat pre-existing floating liens under UCC Article 9.
Super Priority Notice
Meaning
Formal statutory notification delivered by an inventory supplier to existing secured lenders establishes first-priority security rights in purchase-money inventory goods over prior floating liens. Transmitting a super priority notice enables trade creditors to secure unpaid inventory deliveries ahead of earlier bank liens covering all corporate assets. The requirement mandates written delivery to blanket lienholders before new goods arrive at a debtor distributor facility.
It marks the legal exception allowing trade suppliers to bypass standard first-in-time filing rules.
Creditor Notification
Uniform commercial rules require trade creditors to provide written notification to all senior floating lien holders of record. Delivering a super priority notice warns existing bank lenders that incoming inventory shipments carry separate purchase money encumbrances. Notices must describe covered collateral categories and explicitly state intent to acquire purchase money security interests.
Proof of delivery must be secured before goods enter buyer warehouses to preserve priority rights.
Inventory Protection
Trade suppliers fund inventory expansion by retaining superior security rights in delivered goods. Executing a super priority notice ensures supplier claims attach directly to specific wholesale inventory batches and identifiable cash proceeds. Unpaid suppliers can reclaim specific goods during default without sharing proceeds with general floating lien holders.
Priority Displacement
Statutory exceptions displace standard first-to-file priority rules for purchase money financing. Serving a super priority notice elevates trade supplier claims above prior blanket bank liens on the specified collateral. Lenders who receive valid notices cannot absorb purchase-money inventory into general floating liens upon borrower insolvency.