## 1. Attachment and perfection

### Atlas Bank

Atlas filed a valid financing statement on January 3, 2025, covering ForgeSpan’s present and future equipment, inventory, and proceeds. Even if Atlas’s security agreement and advances came later, the filing date is January 3 for priority purposes. Atlas therefore has the ordinary first-filed blanket lien.

### Precision’s CNC equipment

Precision’s equipment security interest attached by May 2, when ForgeSpan received the CNC line under an authenticated security agreement, value was given, and ForgeSpan had rights in the equipment.

Precision filed on May 21, 2026. Under the equipment PMSI rule, Precision had 20 calendar days after ForgeSpan received possession to perfect. May 21 is within that 20-day period. Precision therefore has a **purchase-money super-priority in the CNC line** over Atlas’s earlier blanket lien.

## 2. CNC equipment priority and allocation

The CNC line produced $650,000.

Precision’s unpaid equipment obligation was $620,000. The $200,000 down payment does not defeat PMSI status; Precision’s PMSI covers the financed and unpaid balance.

Allocation:

- **Precision receives $620,000** from the CNC line.
- The remaining **$30,000** goes to Atlas as the next-priority creditor.
- Precision’s equipment claim is paid in full.

## 3. Inventory: perfection, notice, and PMSI priority

Precision filed against the inventory on June 9, before ForgeSpan received the 40 units on June 10. That satisfies the **perfecting/filing side** of the inventory PMSI rule, or at least gives Precision a perfected but junior inventory security interest.

But the inventory PMSI rule also requires Precision to send an authenticated purchase-money notice to Atlas **before** the debtor receives the inventory.

Precision sent the notice on June 11, after the units were received on June 10. Under the supplied rules, a late inventory notice does **not** relate back for inventory already received. Precision’s argument that filing before receipt should be enough is therefore wrong.

There were no later shipments after the June 11 notice, so the late notice does not save any part of this shipment.

Thus:

- Precision has a perfected security interest in the inventory.
- But Precision lacks the **inventory PMSI super-priority** over Atlas.
- Atlas’s January 2025 blanket lien has priority over Precision’s inventory interest.

## 4. Allocation of inventory collateral

The 30 remaining units produced **$750,000**, and the identifiable cash proceeds are **$260,000**.

Because Precision’s inventory PMSI was untimely as to notice, Atlas is senior and receives:

- **$750,000** from the remaining units.
- **$260,000** from the cash proceeds.

Precision receives **$0** from the inventory and its proceeds.

## 5. Total distributions

| Collateral | Allocation |
|---|---:|
| CNC line: $650,000 | Precision $620,000; Atlas $30,000 |
| 30 remaining units: $750,000 | Atlas $750,000 |
| Cash proceeds: $260,000 | Atlas $260,000 |

### Totals

- **Precision receives $620,000** from the supplied collateral.
- **Atlas receives $1,040,000** from the supplied collateral.

### Remaining balances

- Atlas claim: $1,800,000  
  Received: $1,040,000  
  Remaining: **$760,000 unsecured deficiency** from the supplied collateral.

- Precision equipment claim: $620,000  
  Received: $620,000  
  Remaining: **$0**.

- Precision inventory claim: $900,000  
  Received: $0  
  Remaining: **$900,000 unpaid/unsecured deficiency** from the supplied collateral.

## 6. Precision’s litigation position and forward guidance

Precision should argue:

- It has priority over Atlas in the CNC line because its equipment PMSI was perfected within the 20-day window.
- It should recover $620,000 from the CNC collateral.

Precision should **not** argue that its late inventory notice relates back. Under the supplied rules, it does not. Atlas is senior in the 30 remaining inventory units and the $260,000 cash proceeds.

For future inventory shipments, Precision must:

1. Perfect by filing **before** the debtor receives the inventory; and
2. Send an authenticated PMSI notice to Atlas **before** that inventory is delivered.

If Precision sends such a notice before a future delivery, that notice can satisfy the notice condition for later shipments while it remains effective.