What does a PMSI perfected within 20 days of the debtor's receiving delivery of collateral do?

A purchase-money security interest (PMSI) allows a creditor to secure a loan by the specific goods acquired through that loan, and it has a unique advantage in priority over other security interests. When a PMSI is perfected within 20 days of the debtor receiving the collateral, it provides the creditor with a super-priority status.

This means that the PMSI creditor will prevail over all other secured creditors and creditors with liens that might claim an interest in the same collateral, assuming those other interests were not also perfected before the debtor received delivery of the collateral. This provision exists to encourage lending without requiring excessive delays in perfecting the security interest, thus facilitating commerce.

The significance of the 20-day rule is crucial in the context of secured transactions. It also highlights the importance of timely perfection for creditors of PMSIs, as this short window permits them to secure their interests robustly against claims from other parties.

In contrast to this option, defeating all secured creditors would imply a broader scope than what is typically allowed, which would only apply under specific conditions. The protection being limited to the debtor does not capture the essential nature of a PMSI's priority; rather, it primarily protects the PMSI lender. The requirement for notification of other creditors is not