Reclamation Right Worthless Where Debtor's Assets Fully Encumbered.
Mondaq Business Briefing › Nbr. 2004, May 2004
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Extract
Reclamation Right Worthless Where Debtor's Assets Fully Encumbered.
Sellers dealing with a financially troubled company that may be on the brink of filing for bankruptcy ordinarily do so with the assurance that their state law right to reclaim goods sold in the ordinary course of business will either be honored in bankruptcy, or if not, protected by means of a priority administrative claim or a lien. However, the reclamation rights preserved by the Bankruptcy Code are limited. Sellers must be wary to ensure that they take all of the immedia...
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