Article/Intelligence
Napier Park Demands Return of $5.7M in Goods From First Brands Group
Relevant Document:
Demand
Napier Park Global Capital (US) in an Oct. 17 notice has demanded reclamation of goods valued at approximately $5.7 million from the First Brands Group debtors. The goods were delivered to certain debtors during the 45-day period immediately preceding the debtors’ Sept. 28 bankruptcy filing, according to the notice. Napier demands that the debtors segregate and refrain from using the goods, and it otherwise reserves “all rights and remedies,” including the right to assert an administrative expense claim.
Napier puts forward the demand under Bankruptcy Code section 546(c) and section 2-702 of the Uniform Commercial Code. These provisions allow a seller to reclaim goods delivered on credit to an insolvent buyer under specific conditions. Napier asserts the goods were sold to the debtors in the ordinary course of business and received while the debtors were insolvent.
The goods at issue, as summarized in the notice, are as follows:
The debtors are facing pressure from creditors in the face of financial irregularities and potential comingling of collateral. Napier’s demand follows a motion filed by Americal Global Logistics seeking to enforce more than $10 million in claims secured by maritime lien rights in both goods in transit and goods previously delivered to the debtors. Because of financial irregularities, creditors may face overlapping claims and security interests as they seek to improve their positions.
Factoring creditor Raistone and the U.S. Trustee have both filed motions to appoint an independent examiner in the cases to investigate the debtors’ assets and inability to account for $2.3 billion of funds attributable to factoring arrangements and off-balance-sheet financing. The examiner motions are scheduled for a hearing on Nov. 17 at 2 p.m. ET. The hearing to consider final DIP approval is set for Oct. 29 at 11 a.m. ET.
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