Lien prioritization trumps right of reclamation

Trial Notebook

By Steven P. Garmisa

Hoey & Farina

Posted May 5, 2020 9:30 AM

Updated May 5, 2020 11:54 AM

Reviewing the history of the rescissional remedy of reclamation (the limited right of a credit seller to recover merchandise sold to an insolvent buyer) in a fight between Whirlpool Corp. (which sold appliances to hhgregg Inc. shortly before the retailer filed for reorganization under Chapter 11) and Wells Fargo Bank (which provided debtor-in-possession, or DIP, financing to hhgregg), the 7th U.S. Circuit Court of Appeals considered “whether the seller’s reclamation claim is superior to the claims of secured …

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