and the fight is about who has the superior interest in appliances that whirlpool sold to h h gregg whirlpool or wells fargo prior to the bankruptcy reclamation is a state law right under the uniform commercial code it's a right to take back the goods that whirlpool delivered prior to the bankruptcy reclamation protect suppliers like whirlpool against their insolvent customers like a change gray wells fargo was part of a bank group that made loans to h h break prior to the bankruptcy those loans were secured by an interest in the any has any court held that a reclamation right as you argue your brief springs into existence upon the delivery of goods i understand the argument you know you've made here a kind of ari of some of the the purposes the kind of purpose based argument that you set forth in your brief but is there any court that has held that well i think that it is implied certainly in the sixty's and you're asking about the right yeah yeah upon the delivery of the of the inventory here of the appliances i mean you argue that you make that point on page thirteen and then at the bottom of page twenty two and i i mean i totally understand what you're saying  arguments about you know twenty seven o two and some of the purposes there but when you reach conclusions you know there's not there's not citations to case authority and so my question is it maybe it's just narrow and that is is there any any case law out there there's a lot of twenty seven o two case law there is a lot of two thousand seven hundred and two case law and the two thousand seven hundred and two case law focuses on the fact of when the reclamation claim arises from the standpoint that it's it's about recession reclamation is like precision it is about voidable title when the goods were received that title becoming void that's talum are and tell tronics and both of those cases talk about the actual the point in time when the reclamation claim rights actually a rise which is clearly what one of the issues is that we're dealing with here so from our perspective it is st there's the preposition reuse of the wells fargo preposition bank route those were paid off once you don't have a dent anymore you don't have a lien anymore what came next well the next thing that happened was that whirlpool goods were delivered they were delivered next they happen upon the delivery of those goods now notice is given later because if you knew when you were delivering the goods that you had an insolvent purchaser then as a seller you could exercise  right you could stop the goods in transit right there's two different rights that you have as a seller selling to insolvent buyers of yours if you haven't stopped the goods in transit then you have the right to reclaim them but again we're talking about voidable title it's as if a fraud occurred by the buyer who is effectively fraudulent lee indicating that they're going to be able to and will in effect pay for those goods the situation where those quite different right you've got di scene and you're arguing that in that metaphysical moment in time where the pre partition debt was paid off in the post petition that would have come into existence that the recreation rights sprung up in that sort of medic physical  well yeah you could talk about the medical physicals the metaphysical nd or you could talk about the fact also that the post petition deplane debtor in possession lien rights did not actually become affect until at least a day after the bankruptcy but you didn't see this with why is this case not governed by section three hundred and sixty four the based upon the assurances that the bankruptcy judge financing order and we're not going to go you're challenging those a grant of priority given in that order correct correct there's an argument that maybe you should have appealed earlier ok but i given that those were the conditions of assurances that the bankruptcy court gave to the debtor in possession lenders  maybe that maybe the judge should maybe he shouldn't have i'm not sure but given that he did i don't see how three hundred and sixty four u s us pull the rug out from underneath them well there was the interim order and then there was the final order which included the reservation of rights in the very important notwithstanding language and then that talks about when the liens were in effect and the liens or any fact that they're subject in effect as of the date of the entry of the interim order but they are subject to the language in the court's final dip order which included the notwithstanding language saying notwithstanding anything else in this order these reclamation rights are preserved nine in the final order is that the money changed hands based upon the interim order right right so that's why i am worried about three hundred and sixty four sure so the money changed hands  its reclamation plane so we have been three days the debtor is aware that there is a reclamation flame in play here regarding who's going to have rights to the poo then whirlpool also objects to the entry of the final deporter they do that by march th which by the way they put off for a couple of days at the request of the house fargo right before they file their objection once again lenders have a priority well and there's there's two different ways that whirlpool believe it still can succeed here one of them is because whirlpools position is that it's its rights it  a notification when it gave a notification that its rights actually arose at the time that the goods reclaimed goods were actually delivered all right so that's all that just gets back to judge scudder's question about authority for and co a reclamation right to exist in that form and be in forcible sure and i think it's an authority for that is there well i think there is an assumption in the integrated transaction cases the that we don't agree with but there is an assumption even there that that must be why the courts in those cases felt that they had to connect up the pre partition and the post petition lean right because something must have happened between all right so and right cold for example in the right cold case we have the same set of facts here as we have here from the standpoint of the time line there's the filing there's an interim order there's a reclamation demand and there is a final order that's the same set of circumstances that we have here and in the right court case as we're asking the court to do clear that bankruptcy court has said those reclamation rights came ahead of the tip lenders lien rights in the same goods right that this bankruptcy court held that that integrated transaction doctrine is think the two different leads in in that decision so so that's so we do have the issue of the time line but we also have the issue of the courts below simply writing out and eliminating whatever the state rights are and allow them to be enforced in bankruptcy in fact gives the reclaiming creditor a little extra time to make a claim so experience those reclamation rights from the standpoint of the notice provisions and the timing but it doesn't eliminate the look back at state law it doesn't say that reclamation claim rights are subject to believe subject to a priority at the actual there what exactly isn't subject to the prior rights it's subject to the prior rights of a lien holder we have to determine what are the rights of the lien holder where do we look to determine what the rights of the  we look to state court now for looking at reclamation we know that under state court reclamation law reclamation is subject to the rights of good faith purchasers purchaser fires in the ordinary course of business and good faith purchasers and that in the past in some states good faith purchasers included secured lenders in some cases it didn't the th circuit in the reliable case here said well we're not you know we don't have to decide that we don't know does it or doesn't it you know we don't we don't have to decide but in this case we would say that you do have to look even under five  were not affective at the petition date it is not and why not because we still have our good faith arguments that we were never allowed to make that were never even considered by the lower courts we can win either way either under the timing argument or because five hundred and forty six c incorporate state law and we get to go back and take a look at whether wells fargo good morning and may please the court my name is kevin o'keefe i represent the secured lender wells fargo in this appeal before i respond to the arguments raised by ms smith i would like to reiterate three simple facts and one indisputable point of law security interests in whirlpools goods and inventory the bankruptcy court and the district court duly recognized that section five hundred and forty six dollars c therefore compels dismissal of reclamation claim as applied to the secured lenders number one the notion that the bankruptcy court in the district court disregarded the concept of good faith by making the rulings is actually belied by the fact that under three hundred and sixty four eat good faith is required in order to ensure that the dip lenders are protected by immediately funding the reorganization of the debtors state and nd i think it is quite correct that there is not much that can be offered at this point now agreed to this notwithstanding language in her forty nine dollars for which would seem to preserve whatever rights may have existed at that point that's why i've asked about the interim deporter but one of my concerns on this also is that under three hundred and sixty four dollars for a debtor in possession financing it says the court after notice of the hearing may authorize the sort of lending  only if among other things there is adequate protection of the interest of the holder of the lien on the property for which for which senior equal lean is proposed to be granted i don't know how whirlpool was supposed to have a fair opportunity to be heard before the deployment pretty well that case you don't i think there's two issues there number one the priority that the actual liens that were in place on the petition date were owned and as adequate protection for that the preposition lenders would receive the funding a portion of the depends upon entering the final test so it's the roll up of the pre partition security liens that's supposed to get whirlpool the adequate claims these issues were decided in months ago when whirlpool made the businesses should excuse me made the business decision to deliver inventory to the debtors on an unsecured basis with fifteen employees whirlpool did not seek a consignment they did not seek cash on delivery they did not attempt to negotiate with wells fargo was the pre partition lender agent to assure some priority with respect to any potential reclamation  pool sold into or delivered goods to the debtors on the footing of wells fargo's preconditioning so in that respect these relationships were settled well before hand and this is a notion which again is completely unsupported in the law that whirlpools reclamation claim creates a lien that springs back to some indeterminate period of time it's simply unsupported this court has stated and many other ports have stated that the reclamation of man is effective or the reclamation claim is effective at the time the demand is me now the petition date not when a recommendation complaint is filed it's when the demand is made and that i think is reflected in because the issue with that is that the delivery of a bill only creates an open account it doesn't attach to a specific property so this idea that the need the liberty of inventory koreans a security interest that need so the this reservation of rights i think as it must in the in the for whirlpools case does a lot of work it number one supposedly forecloses all these findings of good faith it's within permitted prior means which are defined specifically to exclude reclamation the this general reservation of rights what i think it actually intends to do is to preserve the old fools administrative law administrat superior to the reclamation and on the reason i ask you the question which i'm sure you get is the is only possibility i see of it being significant is if you could somehow conclude that the reclamation right you know kicked into existence as of the petition date because of the delivery of the inventory you know at that point i mean i don't i can't i can't conceive of of any other significance to it than that so i think you refer to this as sort of a metaphysical  spaceplane they argue that it kind of it did it it's brought up on the delivery of the of the i'm in tory you know that that kind of right and i understand why they're making that point it's just well number one it's on support in law and number two there's a critical distinguishing factor here which we have raised in the briefs will raise again the right cold case of the bankruptcy court of delaware which has some reasoning which seems to support the argument there's a critical factual distinction in that the pretty petition debt was rolled up were in effect so as the bankruptcy court in this case correctly noted at no point where the goods from a floating was no window in time for  but finally eleven final point on the the lean gap theory the really is no conflict in the case law the the what whirlpool has sort of posit as a split in the four really because if none of those four cases that i'm referring here to far more right hold terry mark and dana and none of those cases to reclaiming them or seek to obtain payment ahead of pretty or a post petition or it's simply not supported in any of those facts and for that point alone all of this this notion that there's some split in competing theories is simply an opposite what those cases really deal with is the effect of the prior secured parties to lean on the inventory on the subsequent administrative expense claims that the vendor is seeking it's the estate subject to the prior rights of the holder of a security interest it does not say subject to the prior rights of a secure party acting in good faith or subject to the prior rights of the security party unless such secured party acted that  the law records did not miss every and world ready jewels are they simply looked at the law and applied it to the fact of the what whirlpool is posited to sort of an ignorance or disregard of state law is actually not quite what really section five hundred and forty six c does is give effect to article nine concerning secured creditors as well as the bankruptcy section five section three hundred and sixty four which allows courts to grant climbing super priorit at the prior rights of a holder of a security interest language which resolve this matter and tire and then even if good faith was required we have the final dip order in the interim deported with explicit findings of good faith those orders are not appealable at this point there's no basis to undertake a collateral tacked on those findings and tricky for could i ask you i'm trying to understand why the bankruptcy judge thought he needed to convert your motion to one for summary judgment based on taking judicial notice of his own orders as you'll see in the bank of bankruptcy court and as he stated in our status conference before doing this he believed it was out of an upwards caution because the bankruptcy court step orders were in a separate docket number essentially a separate proceeding than the actual world pool adversary contemplate that as they determine what the not withstand medians also i want to point out in connection of the interim an order both of the interim and the final product orders make the pre partition lean subject to challenge proceed so in and they make the challenge proceedings must be filed within a certain period of time and the adversary proceeding is filed hereby whirlpool was filed within the challenge  challenging the globe to say its nature of wells fargo the underlying basis for the prior rights of all when holder to be determined and defined what whirlpool never got that far it didn't get the opportunity to make its arguments about the good faith in this challenge to the preposition and the false petition behavior of wells fargo that's what we're asking this court to  to reverse the decisions that have been made below and to allow rather than simply a legal determination that the bankruptcy code simply eliminate rights under state law which is where the reclamation rights arise from to eliminate our