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This post discusses a bank's security interest.

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I'm confused and need help with answering this scenario:

You are the chief executive officer of Money Games Inc.(MGI), which has begun to market Borrow & Spend, a video game set in the world of finance. To buy ads, MGI borrows $50,000 from First Savings Bank. On MGI's behalf, you sign a note for the loan and offer its accounts receivable as collateral. You sign a security agreement that describes the collateral. The bank does not file a financing statement.

Has the banks security interest attached?
If so, when?

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Solution Summary

You are the chief executive officer of Money Games Inc.(MGI), which has begun to market Borrow & Spend, a video game set in the world of finance. To buy ads, MGI borrows $50,000 from First Savings Bank. On MGI's behalf, you sign a note for the loan and offer its accounts receivable as collateral. You sign a security agreement that describes the collateral. The bank does not file a financing statement.

Has the banks security interest attached?
If so, when?

Solution Preview

There are a few different forms of security interest. In this case, the bank has what's called an attached security interest. This happened when the money was received from the bank, and it happened at that point because the company had something from the bank (money) that in return was secured with something -- in this case, the A/R as an asset for collateral. Therefore, at this ...

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