Reclaim This! Getting Credit Seller Rights in Bankruptcy Right

Abstract

This article exams the impact of amendments to the Bankruptcy Code occasioned by the Bankruptcy Abuse Prevention & Consumer Protection Act of 2005 concerning the reclamation remedy in § 546(c) and a new administrative expense priority in § 503(b)(9) for sellers of goods delivered to the debtor with 20 days preceding the commencement of the bankruptcy case. After tracing the history of seller reclamation claims from their early common law origins through the 2005 amendments to the Bankruptcy Code, the article examines the efforts of courts to ameliorate the disruption to bankruptcy equality and rehabilitation policies that a strict application of these new provisions would engender. It is submitted, however, that this salutary undertaking has been accomplished by relying on questionable techniques of statutory interpretation and stale bromides about the relationship between state and federal law in bankruptcy cases. I conclude that, in large measure, these efforts are not only unsupportable under the accepted constitutional structures of our government, but have also unintentionally done more harm than good by taking the pressure off of the real solution, which would be reform of the Code to align credit seller claims more closely with the purposive object for favored treatment in the first instance. In this connection, I offer, as an illustration, one such approach, but urge ultimately that any special remedy for credit sellers be tailored narrowly so as not to interfere unduly with fundamental system values.

Keywords: bankruptcy, BAPCPA, reclamation remedy, credit seller rights, seller reclamation claims