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Holders of Unredeemed Gift Cards Denied Bankpruptcy Priority Image

Holders of Unredeemed Gift Cards Denied Bankpruptcy Priority

Francis J. Lawall & Francis A. Weber

For some time now, the brick and mortar side of the retail industry has been in financial distress. In 2015 and 2016 alone, brand-name ­companies such as Sports Authority, RadioShack, Aéropostale, American Apparel, Eastern Mountain Sports and City Sports sought bankruptcy protection. A common question in these cases is how to treat holders of unredeemed gift cards. Are they near the back of the line with other general unsecured creditors, or are they entitled to “priority” payment status under the Bankruptcy Code?

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Vendor's Reclamation Rights Survive Lien of Post-Petition DIP Loan Image

Vendor's Reclamation Rights Survive Lien of Post-Petition DIP Loan

Barry M. Klayman & Mark E. Felger

In <i>In re Reichhold Holdings US</i>, bankruptcy judge Mary F. Walrath upheld the validity of a vendor's administrative claim for its reclamation rights under Section 546(c) of the Bankruptcy Code as against a post-petition DIP lender. In doing so, Judge Walrath declined to follow cases from the Bankruptcy Court of the Southern District of New York that held otherwise.

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