Reclamation Right of Seller Under Section 2-702(2) of the Uniform Commercial Code Is Valid Against Trustee in Bankruptcy

Examines the United States Court of Appeals for the Ninth cirucit case in re Telemart Enterprises, Inc. In Telemart, the ninth circuit reversed the lower court decision and disallowed the trustee from denying the petition for reclamation by the seller on the grounds that seller had failed to prove the debtor’s insolvency prior to the debtor’s bankruptcy filing. The court held that “Section 2-702(2) of the [Uniform Commercial Code] does not create a spurious statutory lien invalid against the trustee in bankruptcy . . . [nor does it] create a state priority forbidden under section 64 of the Bankruptcy Act.”