Lenders’ Pre and Post-Petition Liens Trump Vendor’s Reclamation Rights Under the Amended Bankruptcy Code

Kelley Drye’s Bankruptcy and Restructuring Practice Group has prepared a client advisory regarding the Delaware Bankruptcy Court’s decision in In re Advanced Marketing Systems, Inc. (Simon & Schuster, Inc. v. Advanced Marketing Systems, Inc.). The Court in that case determined that a secured lender’s pre and post-petition liens are superior to a vendor’s reclamation rights. This decision is one of the first opinions interpreting the newly amended section of the Bankruptcy Code addressing vendor’s reclamation rights.