Reclamation - An Uncertain Remedy

Section 546(c) of the Bankruptcy Code gives the seller the right to reclaim goods sold on credit to an insolvent debtor after the debtor has filed a bankruptcy action. Section 546(c), however, does not create a substantive right to reclamation. It allows a seller to reclaim goods only to the extent there is a statutory or common law right to do so. In re Coast Trading Co. Inc., 744 F.2d 686, 692 (9^th Cir. 1984)¹

Exclusive Remedy

Section 546(c), Bankruptcy Code is the exclusive remedy for a reclaiming seller when the buyer is in bankruptcy. In re Julien Co., 44 F.3d 426 (6^th Cir. 1995).² A reclaiming seller who fails to prove all the elements of a reclamation claim under Section 546(c) cannot avail itself of a common law fraud remedy because Section 546(c) is the exclusive remedy for reclaiming creditors. In re MGS Marketing, 111 B.R. 264 (9^th Cir. BAP 1990); In re Flagstaff Foodservice Corp., 56 B.R. 899 (Bankr. S.D. N.Y. 1986).³