The debtor purchased cattle from the defendant pre-petition, and his payment checks were dishonored. The seller filed a replevin action and obtained possession of the cattle pursuant to an order from the state court. Shortly after that replevin order was entered, the debtor filed a Chapter 11 petition. The debtor in possession then filed this adversary proceeding to exercise his avoidance powers and set aside the seller’s successful reclamation of the cattle.
On cross-motions for summary judgment, the bankruptcy court denied the debtor in possession's motion because the transaction was a cash sale; the seller had successfully exercised his U.C.C. rights pre-petition; and the Bankruptcy Code’s reclamation section was inapplicable here. The court granted the seller’s motion because the exercise of reclamation rights is not a preferential transfer.