Is an MCA a Secured Claim in Bankruptcy: 5 Questions About the UCC Filing

A funder's financing statement becomes a secured claim in bankruptcy only after it survives two documents it did not write: the proof of claim form, and the order that decides whether the debtor may spend its own cash. The financing statement sits in a state database until someone searches for it. The bankruptcy court meets it later, attached to Official Form 410, with a box checked to say the claim is secured.

The five questions below are the ones that box raises once a case is open. They assume the general rule that a claim is secured only to the extent of collateral value, and they spend their time on what happens to a merchant cash advance lien inside the claims register and the cash collateral motion, where the outcome is decided.

1. The Secured Box on the Proof of Claim Proves Only What Is Attached to It

A proof of claim signed and filed in accordance with the rules "is prima facie evidence of the claim's validity and amount." The phrase that carries weight is in accordance with the rules. Under Bankruptcy Rule 3001, a claim or a security interest "based on a writing" must come with a copy of that writing, and a creditor claiming a security interest must attach "evidence that the security interest has been perfected." For a merchant cash advance that means the agreement, any security agreement inside it, and the filed financing statement with its date and filing office.

When those papers are missing, the claim still counts as deemed allowed under section 502(a) until someone objects. The objection is what puts the burden back in play. An owner reviewing a funder's claim should read the attachments before the dollar figure, because the dollar figure is only as good as the paper stapled behind it.

2. A Later Filing Date Can Leave a Secured Claim Worth Nothing

New York's version of Article 9 ranks conflicting perfected security interests "according to priority in time of filing or perfection." The Ohio case of Butler Trucking v. CashFloit shows what that ranking does to a funder that arrives last. CashFloit advanced $40,000 against $56,800 of future receipts on November 25, 2024, and filed its UCC-1 the same day. Three lenders had filed earlier, on May 20, 2020, April 4, 2023 and October 23, 2024, with claims of about $473,856.60, against personal property the debtor scheduled at about $81,620. CashFloit filed a proof of claim and checked the box for a secured claim based on a lien on accounts receivable.

The trucking company's answer came from 11 U.S.C. 506. A claim is secured "to the extent of the value of such creditor's interest in the estate's interest in such property," and unsecured for the rest; under 506(d), a lien securing a claim that is not an allowed secured claim "is void." In July 2025 the bankruptcy court for the Northern District of Ohio denied the funder's motion to dismiss, citing the Supreme Court's decision in Caulkett for the rule that a claim is deemed unsecured when higher liens absorb all of the collateral's value. A junior financing statement in that position resembles a coat check ticket presented after the first three holders have already left wearing the only coat.

The same arithmetic ran through a Subchapter V case in Orlando. A bank had perfected a blanket lien by a UCC-1 filed on September 9, 2022, and held a claim of $522,947.51; the two funders filed their statements in late September 2024. The funders agreed to orders under 506(a) providing that, if their deals were secured transactions at all, their secured claims were "wholly unsecured due to FNB's senior secured lien."

Filing order decides rank, though rank was never the funders' only problem. A priority date says nothing about whether the thing filed against exists yet, and a security agreement reaching "all accounts ... now or hereafter owned or acquired" assumes a supply of accounts the business may stop producing, or may produce only after the petition, when a different statute takes over. There are exceptions for purchase money and deposit accounts, though in the cases that reach a bankruptcy court they seldom rescue the last funder in line.

3. Receipts After the Petition Are Cash Collateral Only if a Lien Reaches Them

Cash collateral is cash and its equivalents "in which the estate and an entity other than the estate have an interest." Under section 363(c)(2) a debtor may not use it without the consent of each interested entity or a court order after notice and a hearing. The question for the funder is whether it holds an interest in the dollars that arrive after filing.

Section 552(a) says property acquired after the case begins "is not subject to any lien resulting from any security agreement entered into by the debtor before the commencement of the case," subject to the exception in 552(b) for proceeds of prepetition collateral. The Orlando court applied that rule in October 2025 and held that the funders "neither own nor have a security interest in the Debtor's post-petition receivables," because "a hope of future receivables is not property" to which a sale or a lien could attach. Receivables earned before the petition, and their identifiable proceeds, are a separate matter, and that is where the funder's lien, if valid and senior enough, has something to hold.

But the funder's own paperwork can undo the argument before it starts. In the Nebraska Cornerstone Tower case, a funder that called its deal a sale had never perfected, and the court held the accounts remained property of the estate under New York's Article 9.

4. An Interim Order Grants a Replacement Lien of Whatever Quality Existed

On December 17, 2024, Butler Trucking filed its petition and, soon after, a motion to use cash collateral that acknowledged the funder "may claim" an interest and offered it a replacement lien. Four interim orders followed, each reserving the right to challenge the validity and priority of the funder's position. When the debtor later sued to have the lien declared void, the funder argued estoppel: the debtor had treated it as secured and could not now say otherwise.

The court was unpersuaded at the pleading stage. The replacement lien was "of the same quality and priority that it had at filing (which could be none)." Adequate protection under section 361 can take the form of cash payments, a replacement lien, or other relief, and it protects only the value of an interest that exists. Section 363(p) places the burden on "the entity asserting an interest in property" to prove "the validity, priority, or extent of such interest."

A funder that consents to interim orders has not conceded its lien. Neither has the debtor.

5. The Lien Is Decided in an Adversary Proceeding or a Valuation Motion, and Deadlines Bind

A claim objection cannot carry "a demand for a type of relief specified in Rule 7001," and Rule 7001 lists a proceeding "to determine the validity, priority, or extent of a lien." That is why the Ohio debtor filed an adversary complaint. The Orlando funders learned the other half of the lesson: they disputed collateral value for the first time in their confirmation objections, and the court held the argument untimely because the orders on the motions to value were final. A lien also does not disappear because its holder files nothing; Rule 3002(a) says a lien "is not void solely because an entity failed to file a proof of claim."

Where a Negotiated Figure Meets the Lien Stack

A settlement priced on the assumption that a funder is secured deserves the same scrutiny a bankruptcy court would give the proof of claim. Delancey Street, which is not a law firm, neither litigates lien priority nor files bankruptcy cases; it negotiates merchant cash advance balances and, as part of a no-cost confidential review, looks at the agreement, the UCC filings and the bank activity to see what position a funder can support. When the answer depends on a 506 valuation or an adversary complaint, the business needs bankruptcy counsel, and Delancey Street coordinates with independently licensed attorneys for that work rather than performing it. The financing statement will still be on file with the state when the case ends. What it secures by then is a question for the documents behind it.