Under section 503(b)(9) of the Bankruptcy Code, a creditor may recover as a priority administrative expense the value of goods sold to the debtor in the ordinary course of its business that are “received” by the debtor within the twenty-day period before the filing of the bankruptcy petition. The stakes of such a determination are considerable since, in most Chapter 11 business bankruptcies, priority administrative claimholders are paid in full while general unsecured claims receive only pennies on the dollar, if anything all. Several months ago in this blog, we discussed the opinion of the Third Circuit Court of Appeals in World Imports Ltd. which addressed, under section 503(b)(9), the applicable date of “receipt” by the debtor of goods that are shipped from the seller in China to the buyer in the United States under free on board shipping terms. The Third Circuit reversed the Bankruptcy and District Courts below and held that “receipt” of goods under the statute occurs when the buyer takes physical possession of the goods in the United States port as opposed to the earlier date when the goods are shipped. We observed that this statutory construction would be hailed as a victory by the trade vendor community as more shipments will be deemed to fall within the twenty-day window resulting in greater administrative claim eligibility. Continue Reading