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In re Mel Golde Shoes, Inc.
United States Court of Appeals for the Circuit
403 F.2d 658 (1968)
Johnson & Murphy Shoes, Inc. (Johnson) (plaintiff) delivered a shipment of shoes to Mel Golde Shoes, Inc. (Golde). The next day, two creditors (defendants) levied attachments on Golde’s entire inventory, which meant the inventory could be used to satisfy the debts Golde owed to the creditors. Soon after, Golde filed for bankruptcy. Johnson filed a reclamation petition in Golde’s bankruptcy proceeding. Johnson argued that because Golde purchased the shoes on credit while insolvent, Johnson had the right to reclaim the shoes. Golde’s creditors argued that because they had valid liens in the inventory, they were lien creditors with a superior interest to Johnson’s interest as a reclaiming seller. The bankruptcy judge treated Johnson as a competing lien creditor. The district court disagreed and said that Johnson’s right to reclamation was subordinate to the lien creditors’ interest in the inventory. Johnson appealed, arguing that its right to reclamation should be given priority over the lien creditors’ rights.
Rule of Law
Holding and Reasoning (O’Sullivan, J.)
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