Description
Suppliers often provide goods to retailer merchants on a consignment or sale basis. In doing so, they should be aware of the UCC rules governing consignments and reclamation rights and their treatment in bankruptcy. Disputes among consignors, sellers, inventory lenders, and bankruptcy debtors frequently arise in retail and other bankruptcy cases. Such disputes can be mitigated if consignors and sellers of goods take steps to protect their rights and interests.
Whether a particular consignment falls within the UCC definition is a critical issue. If a consignment falls outside of the UCC definition, common law rules apply, and the consignor, as the owner of the goods, usually prevails as to the goods over the claims and interests of creditors or a bankruptcy trustee of the consignee. If a consignment falls within the UCC, the consignor needs to take the same steps as an inventory purchase-money secured party to perfect its interest and prevail over a competing inventory secured lender's security interest.
UCC Section 2-702(2) codifies reclamation, the seller's right to take back goods sold on credit terms to an insolvent buyer. If the buyer files for bankruptcy before a seller exercises its UCC remedies, the seller must look to Section 546(c) of the Bankruptcy Code to enforce its reclamation rights. A seller might also pursue an administrative expense claim under Section 503(b)(9) in certain circumstances. Counsel must have a thorough understanding of the reclamation and other remedies available, given the facts and circumstances.
Listen as our authoritative panel discusses proper documentation of a consignment of goods and steps for perfection and priority under the UCC, if applicable. The panel will also discuss reclamation rights procedures under the UCC and in bankruptcy proceedings as well as best practices.
Presented By
Mr. Kettering last taught as Lecturer in Law at Columbia University School of Law, and before that taught at Case Western University School of Law, Brooklyn Law School, the University of Miami School of Law, Loyola University New Orleans School of Law, New York Law School, and the University of Pittsburgh School of Law. Before joining the academy he was a partner of Reed Smith Shaw & McClay (now Reed Smith LLC), where his practice centered on sophisticated transactional work, including derivatives and foreign exchange transactions, syndicated lending, highly leveraged transactions, asset-based lending, structured finance and securitization, and mergers and acquisitions.
Mr. Smith concentrates his practice in commercial law, debt financings, structured financings, workouts, bankruptcies, and international transactions. He is particularly knowledgeable on commercial law and insolvency matters, both domestic and cross-border. His representations have included those in major bankruptcies including Lehman and the City of Detroit. Mr. Smith often advises financial institutions on documentation and risk management issues.
Mr. Weise practices in all areas of commercial law and has extensive experience in financing, especially in those secured by personal property, including structured financing. He is regarded as one of the foremost authorities on Article 9 of the UCC. He is a member of the Permanent Editorial Board for the UCC and a member of the American Law Institute’s UCC Article 9 Drafting Committee. Mr. Weise is also the past chair of the American Bar Association’s Business Law Section Legal Opinions Committee.
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
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Date + Time
- event
Wednesday, May 5, 2021
- schedule
1:00 p.m. ET./10:00 a.m. PT
- UCC vs. non-UCC consignments
- UCC perfection and priority
- Searches
- Notification to competing inventory secured lenders
- Filings
- Reclamation under the UCC Section 2-702(2)
- Reclamation in bankruptcy
- Section 546(c): procedures and pitfalls
- Section 503(b)(9) administrative claim for value: limitations
The panel will review these and other key issues:
- What constitutes a consignment of "goods" under the UCC, and why is it an important determination to make upfront?
- What steps should a consignor of goods take to ensure perfection and priority of its interest over a bankruptcy trustee or competing inventory secured lender?
- How does reclamation under Section 2-702(2) of the UCC differ from the reclamation under Section 546(c) the Bankruptcy Code?
- When is an administrative expense claim available under Section 503(b)(9)?
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