OPINION
Before the Court is the objection of Standard Register Inc. (“SRI”) to International Imaging Materials, Inc.’s (“IIMAK”) section 503(b)(9) claim. The issue in the instant case is whether goods were “received by” the Dеbtor from IIMAK within the meaning of section 503(b)(9) of the Bankruptcy Code. Case law instructs that courts can look to the Uniform Commercial Code (U.C.C.) to inform a section 503(b)(9) analysis, and the parties have briefed the applicability of U.C.C. §§ 2-702 and 2-705. Additionally, the Court has the benefit of the Third Circuit’s very recent decision in In re World Imports, Ltd,
JURISDICTION AND VENUE
The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 1334 and 157(a) and (b)(1). Venue is proper in this Court pursuant to 28 U.S.C. §§ 1408 and 1409. Consideration of this matter constitutes a core proceeding under 28 U.S.C. § 157(b)(2)(A), (B), and (0).
BACKGROUND
On March 12, 2014 (the “Petition Date”), Standard Register Company (n/k/a SRC Liquidation, LLC) (referred to hereinafter as thе “Debtor” or “SRC”) and its affiliates commenced voluntary cases under chapter 11 of the Bankruptcy Code.
Pursuant to section 2.11 of the Purchase Agreement, Taylor was entitled to designate one or more parties (each a “Designated Buyer”) to purchase the transferred assets and аssumed liabilities. On the Closing Date, a Joinder to the Purchase Agreement was executed that designated Standard Register, Inc. as a Designated Buyer. Accordingly, SRI assumed “all [liabilities for amounts owed to vendors as administrative expense сlaims under [sjection 503(b)(9).” Asset Purchase Agreement §§ 2.3(a)(iv), .11.
On November 19, 2015, the Court confirmed the Debtor’s Chapter 11 Plan of Liquidation (the “Plan”). The Plan provides that SRI has “exclusive authority to compromise, resolve, and [ajllow” any claims it must satisfy under thе Purchase Agreement. Chapter 11 Plan of Liquidation § 4.2.
SRI and IIMAK find themselves in a post-confirmation dispute over IIMAK’s section 503(b)(9) claim. IIMAK was a vendor to the Debtor, and its products were at times delivered directly to the Debtor, and at other times were delivered to the Debt- or’s customers (at the Debtor’s direction and utilizing the Debtor’s account with United Parcel Service). At bottom, the issue here is whether claims for goods sent by IIMAK to the Debtor’s customers qualify for priority treatment undеr section 503(b)(9).,
The parties have stipulated to the following relevant facts:
a. Goods delivered by IIMAK directly to the Debtor during the relevant twenty day period (the “Directly Delivered Goods”) total $2,096.27. The parties agree that Directly Delivered Goods qualify as an administrative expense claim pursuant to section 503(b)(9). In addition, shipping charges of $270.01 relate to Directly Delivered Goods. SRI contends the claim relating to Directly Delivered Goods should exclude the shipping charges. IIMAK disagrees and argues that the shipping charges should increase the section 503(b)(9) claim relating to Directly Delivered Goods to $2,366.28.
b. Goods delivered by IIMAK to UPS for shipping via a Standard Registeraccount to a third party SRC сustomer during the relevant twenty day period (the “Drop Shipped Goods”) total $53,190.24. IIMAK already received $8,750.46 relating to Drop Shipped Goods, Therefore, the balance of the Drop Shipped Goods is $44,439.78. Furthermore, shipping chаrges of $1,608.37 relate to Drop Ship Goods. IIMAK contends that the allowed 503(b)(9) claim relating to Drop Ship Goods should be $46,048.15, the sum of both the $44,439.78 balance amount and the shipping charges. SRI disagrees and asserts that Drop Ship Goods, including the shipping charges, should be excluded from the 503(b)(9) claim.
c. In sum, SRI maintains that IIMAK’s allowed 503(b)(9) claim should total $2,096.27. IIMAK alleges that its 503(b)(9) claim is $48,414.43.
LEGAL STANDARD
Section 503(b)(9) of the Bankruptcy Code accords administrative expense priority to a claim equal to the vаlue of any goods sold to the debtor in the ordinary course of the debtor’s businesses and received by the debtor within twenty days before the petition date:
(b) After notice and a hearing, there shall be allowed administrative expenses ... including-
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(9) the value of any goods received by the debtor within 20 days before the date of commencement of a case under [title 11] in which the goods have been sold to the debtor in the ordinary course of such debtor’s business.
11 U.S.C. § 503(b)(9) (emphasis added). Administrative expenses listed in section 503(b) are “discrete exceptions to the general equality principle.” Ningbo Chenglu Paper Prods. Mfg. Co. v. Momenta, Inc., No. 11-cv-479-SM,
DISCUSSION
SRI and IIMAK disagree as to whether IIMAK’s shipment of goods during the relevant twenty day period, via UPS and using the Debtor’s account, constituted receipt by the Debtor for purposes of satisfying the “received by the debtor” requirement under section 503(b)(9). The phrase “received by the debtor” is not defined in the Bankruptcy Code. However, case law teaches that courts may look to Article 2 of the U.C.C. when anаlyzing section 503(b)(9) claims. See, e.g., In re Momenta, Inc.,
The U.C.C. defines receipt of goods as “taking рhysical possession of them,” “unless the context clearly requires otherwise.” U.C.C. § 2-103(l)(c). An example of a “context [that] clearly requires otherwise” includes stoppage and reclamation rights. See U.C.C. §§ 2-702,-705. Section 2-705 of the U.C.C. specifies four situations in which a buyer “receives” goods such that the stoppage provisions of section 2-705 no longer apply and the reclamation provisions of section 2-702 come into play: one situation involves physical
SRI relies on Montello Oil Corp. v. Ma-nn Motor Oil, Inc. (In re Marin Motor Oil, Inc.),
Despite the different remedies provided under sections 546(c) and 503(b)(9), the word “received” in both provisions should and does hold the same meaning. When two words are similar and concern related issues, they may be treated as “functional equivalent^]” and interpreted identically. In re Circuit City Stores, Inc.,
IIMAK argues that the courts’ use of U.C.C. § 2-705(2) to interpret receipt under section 546(c) fails to consider the
Subsequent to the parties’ briefing, the Third Circuit issued an opinion bearing directly on this matter. In World Imports, sellers shipped goods to a debtor company via сommon carrier from China to the United States “free on board” at the port of origin, so the risk of loss passed to the debtor upon transfer at the port. World Imports,
Considering the above analysis, the Court finds that IIMAK failed to carry its burden to demonstrаte its entitlement to an administrative priority for the value of the goods identified in its 503(b)(9) claim. As stipulated by the parties, these goods were delivered by IIMAK to a common carrier (UPS) for shipping via the Debtor’s account to a third party SRC customer during the relevant twenty day period. The Debtor never physically possessed the goods. Only UPS possessed the goods, and as a carrier UPS does not qualify as an agent. World Imports,
CONCLUSION
For the foregoing reasons, the Court will sustain SRI’s objection and disallow IIMAK’s administrative expense claim. The Court will allow IIMAK a non-priority, general unsecured claim in the amount of $46,318.16.
An appropriate order follows.
. Following the Effective Date of thе Debtor’s Chapter 11 Plan of Liquidation, the Court entered a Final Decree Closing Certain Cases and Amending Caption of Remaining Case [Docket No. 1417] closing the cases of each of the Debtor’s affiliates. SRC Liquidation, LLC remains as the sоle debtor.
. Specifically, the examples of receipt listed in U.C.C. § 2-705 include:
(a) receipt of the goods by the buyer; or
(b) acknowledgement to the buyer by any bailee of the goods except a carrier that the bailee holds the goods for the buyer; or
(c) such aсknowledgment to the buyer by a carrier by reshipment or as warehouseman; or
(d) negotiation to the buyer of any negotiable document of title covering the goods.
U.C.C, § 2—705(2)(a)-(d). Items (b), (c), and (d) are deemed constructive receipt.