How Claim Traders Can Pursue Reclamation and Administrative Expense Claims in Retail and Other Insolvencies

As a result of changing consumer spending habits, numerous retailers – including Sports Authority, Pacific Sunware, Aeropostale and, most recently, American Apparel – have been forced to close down their storefronts or enter into bankruptcy. Others, such as Macy’s, Sears, J.Crew and ToysRUs, are also reaching distressed levels. While these retail bankruptcies have negative implications for landlords, tenants and other stakeholders, they may offer great opportunities for claim traders in light of two key provisions under the Bankruptcy Abuse Prevention and Customer Protection Act of 2005 (2005 Amendment), which sought to strengthen vendor-creditor rights under the federal bankruptcy law. In a guest article, Darius J. Goldman and Matthew W. Olsen, partners at Katten, along with associate Jessica P. Chue, outline how a vendor-creditor’s claim may qualify for reclamation or administrative expense priority under the 2005 Amendment. For additional insight from Goldman and Chue, see “What the LSTA’s Revised Delayed Compensation Requirements Mean for Loans Trading on Par/Near Par Documents” (Oct. 27, 2016). For more on claim trading from Goldman, see “How Hedge Fund Claim Traders Can Protect Their Interests in the Visa/MasterCard Litigation” (Jun. 14, 2016); and “What Hedge Fund Claim Traders Need to Know About the Visa/MasterCard Settlement” (Jun. 25, 2015). 

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