498 B.R. 19
S.D.N.Y.2013Background
- Hudson appeals a Bankruptcy Court denial of its 503(b)(9) administrative claim for electricity sold to the Reorganized Debtors within 20 days before petition date.
- Bankruptcy Court denied Hudson’s motion, finding electricity not clearly a “goods” under 503(b)(9) after applying UCC Article 2 definitions and considering BAPCPA’s history.
- Court adopts a uniform, federal interpretation of “goods” for 503(b)(9), relying on UCC 2-105 definitions and circuit-wide bankruptcy practice.
- Bankruptcy Court treated electricity as potentially ambiguous under the UCC definition for goods and examined legislative history to conclude against priority.
- Hudson challenges movability/identification of electricity under UCC 2-105(1) and 2-105(4), arguing identifiable pre-contract quantity and identified bulk arguments.
- Court vacates the order and remands for an evidentiary hearing to determine whether the electricity in this case qualifies as “goods” under the UCC definitions and 503(b)(9) in light of the specific delivery arrangements.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether electricity is a “good” under 11 U.S.C. § 503(b)(9). | Hudson asserts electricity is a UCC good. | Debtors contend electricity is not clearly a good under 503(b)(9). | Ambiguity remains; remand for evidentiary hearing warranted. |
| Appropriate definitional framework for “goods” under 503(b)(9). | Hudson urges uniform UCC 2-105 interpretation. | Reorganized Debtors rely on federal, uniform interpretation with narrow construction. | Court adopts UCC 2-105 as the federal definition of goods for 503(b)(9). |
| Whether the record allowed a proper de novo determination without an evidentiary hearing. | Hudson maintains factual issues exist requiring evidence. | Record submissions suffice for legal question; evidentiary hearing unnecessary. | Remand for evidentiary hearing; record inadequate to resolve movability/identification facts. |
Key Cases Cited
- In re Erving Indus., Inc., 432 B.R. 354 (Bankr.D.Mass.2010) (electricity qualifies as a good under 503(b)(9) under UCC definitions)
- In re Grede Foundries, Inc., 440 B.R. 791 (W.D.Wis.2010) (electricity as a good under 503(b)(9) under UCC definitions)
- In re Circuit City Stores, Inc., 416 B.R. 531 (Bankr.E.D.Va.2009) (adopts UCC definition of goods for 503(b)(9) interpretation)
- In re Pilgrim’s Pride Corp., 421 B.R. 231 (Bankr.N.D.Tex.2009) (goods concept under 503(b)(9) tied to identification/quantity)
- In re Goody’s Family Clothing, Inc., 401 B.R. 131 (Bankr.D.Del.2009) (uses UCC 2-105 definition of goods for 503(b)(9))
- Norcon Power Partners, L.P. v. Niagara Mohawk Power Corp., 163 F.3d 153 (2d Cir.1998) (UCC not applied to electricity as service under New York law; discussion of movability/identification)
- In re Samaritan Alliance, LLC, (no official reporter citation) (2008 WL 2520107) (discussed as contrasting view; included for context (omit from list if WL)} ,{)