In a recent New York case, the Court refused to provide equitable remedies for a presumably secured party based on a lack of due diligence in seeking to perfect their interest. In Fangio v. DivLend Equipment Leasing, LLC, the lender provided $1.1 million to the debtor which the debtor used to purchase 30 vehicles. The applicable agreement required the debtor to execute all financing statements necessary for the lender to perfect its security interest. However, the debtor failed to execute the necessary documents, defaulted on the loan, and filed for bankruptcy. The Court held that because the lender did not determine the proper method for perfecting their interest until well after consummation and did not did accelerate the outstanding balance when the debtor refused to execute the financing statements, the lender essentially waived its rights to obtain an equitable remedy.
This case further demonstrates the importance of ensuring that lenders have sound practices in place for properly perfecting all security interests.