Page 4 - John Hundley 2008

the debtor as “Roger House” instead of “Rodger House” was seriously misleading.

► In re FV Steel & Wire Co., 310 B.R. 390 (Bankr. E.D. Wis.2004), and In re Asheboro Precision Plastics,
Inc., 2005 WL 1287743 (Bankr. M.D.N.C. 2005), finding filings under trade names ineffective.
► Receivables Purch. Co. v. R & R Directional Drilling, L.L.C., 263 Ga.App. 649, 588 S.E.2d 831 (2003),
finding a filing against “Net work Solutions, Inc.” ineffective as to Network Solutions, Inc.
► Host America Corp. v. Coastline Financial, Inc., 2006 WL 1579614 (D. Utah 2006), finding that listing
the debtor as “K W M Electronics Corporation” instead of “K.W.M. Electronics Corporation” was misleading.

► In re Fuell, 2007 WL 4404643 (Bankr. D. Ida. 2007), finding a statement seriously misleading in listing
the debtor as Andrew Fuel rather than Andrew Fuell.

► In re Borden, 2007 WL 2407032 (D. Neb. 2007), finding use of “Mike Borden” instead of Michael
Borden seriously misleading.

► Corona Fruits & Veggies, Inc. v. Frozsun Foods, Inc., 143 Cal.App.4th 319, 48 Cal.Rptr.3d 868 (2006),
finding the listing as “Armando Munoz” misleading as to Armando Munoz Juarez.
► In re John’s Bean Farm of Homestead, Inc., 378 B.R. 385 (Bankr. S.D. Fla. 2007), finding a listing of
“John Bean Farms, Inc.” ineffective as to “John’s Bean Farm of Homestead, Inc.”
Critics argue such decisions fly in the face of the trend of modern law to do substantial justice.
Moreover, such decisions incorrectly assume that each individual has an “exact full legal name”. To the
contrary, a treatise often cited as stating Illinois law defines a name as “the designation by which the person is
distinctively known in the community” and states, “Where two names have the same original derivation, or
where one of such names is a contraction or corruption of the other name, and in common usage they are
considered one and the same ... the use of one name for the other is entirely immaterial”; the “name by which
a person is commonly or usually known will be good, even though it differs from the name given in baptism”;
and a “person may be designated in legal proceedings by the name by which he is commonly known,
although it is not his true name” (27A I.L.P. Names § 1). Moreover, a person generally may change his or her
name without resort to legal proceedings, provided the intent is not to defraud, “and for all purposes the name
thus assumed will constitute his or her legal name just as much as though he or she had borne it from birth”
(id. § 2). And if two spellings “according to the ordinary rules of pronouncing the English language, may be
sounded alike ... the variance is prima facie immaterial” (id. § 9). If the debtor lawfully made the contract as
Mike Borden, can the creditor really be faulted for using the same name on the financing statement?
However, creditors ignore such decisions at their peril. And it is no answer that “‘Mike’ would
never stick it to me for not calling him ‘Michael’”. This is so because the error usually will not be raised by
“Mike”. It may be raised by any subsequent creditor seeking to climb in front of the filed financing statement,
and it may be raised by a bankruptcy trustee exercising his “strong arm” powers on behalf of a hypothetical
lien creditor. See In re Fuell, 2007 WL 4404643 (Bankr. D. Ida. 2007). What that means is that even if every
creditor involved in fact knew that Mike Borden was Michael Borden, the defect can nonetheless be used to
attack the “defective” financing statement. Indeed, because bankruptcy trustees generally have a duty to
maximize the recovery for the unsecured creditors – not the secureds – they often believe they have a legal
duty to attack any secured lien which is defective. Accordingly, to avoid such attacks, creditors would be well-
advised to require debtors to submit proof of their correct names – and in the case of potential variances, to
file financing statements against each of those variances.

John\Sharp Thinking\#4.doc
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