Reclamation of goods: a written demand is only part of the analysis

Start with the goods actually received

Section 546(c) recognizes a seller's reclamation rights on specified terms. The provision concerns goods sold in the ordinary course of the seller's business and received by the debtor while insolvent within the stated period before bankruptcy. A sales invoice alone does not establish when or where the debtor received the goods.

Collect shipping records, delivery confirmations, warehouse information, item descriptions, and communications about returns or onward sales. Distinguish the order date, shipment date, and receipt date. Those events can fall in different periods, particularly where intermediaries or multiple locations are involved.

The demand has a statutory timetable

Section 546(c) includes a 45-day receipt framework and written-demand rules, with a specified postpetition alternative where the 45-day period expires after commencement. Counsel should calculate the actual deadline from the applicable facts and statutory language. Waiting for a general trade-creditor notice can lose valuable time.

A demand should accurately identify the seller, debtor, goods, and basis asserted. This article is not a demand template. The correct recipient, contents, service evidence, and case-specific procedure require attention to the transaction and governing law.

Prior rights and alternative claims matter

The statutory reclamation right is subject to prior rights of a holder of a security interest in the goods or their proceeds. A seller should therefore assess the collateral situation before treating reclamation as assured physical recovery. The goods' status and the debtor's records may also create factual disputes.

Section 546(c)(2) refers to rights under section 503(b)(9) even where the specified reclamation notice was not provided. That separate provision concerns qualifying goods received within 20 days before filing. It has its own elements and should not be confused with an automatic substitute of identical value.

Organize the review quickly

• Confirm receipt dates and identify the goods.
• Preserve the written demand and evidence of delivery.
• Investigate asserted prior security interests.
• Evaluate reclamation and any administrative-expense theory separately.