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134480.00100/121260012v.2

OBJECTION TO DEBTORS’ NOTICE OF PROPOSED TREATMENT OF RECLAMATION CLAIMS 

BLANK ROME LLP 

Jonathan A. Loeb (SBN 162758) 

JLoeb@BlankRome.com 

2029 Century Park East, 6th Floor 

Los Angeles, CA 90067 

Telephone: 424.239.3400 

Facsimile: 424.239.3434 

Attorneys for Sabre Industries, Inc. 

UNITED STATES BANKRUPTCY COURT 

NORTHERN DISTRICT OF CALIFORNIA 

SAN FRANCISCO 

In re: 

PG&E Corporation and 

Pacific Gas and Electric Company, 

Debtors. 

 Case No. 19-30088 

(Jointly Administered) 

Chapter: 11 

OBJECTION TO DEBTORS’ NOTICE 

OF PROPOSED TREATMENT OF 

RECLAMATION CLAIMS 

Re: Dkt. No. 2789 

Sabre Industries, Inc. (“Sabre”), by and through its undersigned counsel, objects to the 

Debtors’ proposed treatment of its claim as set forth in the Debtors’ Notice of Proposed Treatment of 

Reclamation Claims (the “Notice”), and respectfully states as follows: 

BACKGROUND

On January 29, 2019 (the “Petition Date”), the Debtors commenced voluntary cases under 

chapter 11 of the Bankruptcy Code. The Debtors continue to operate their businesses and manage 

their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy 

Code. 

Sabre is a manufacturer and supplier of highly-engineered support structures for electric 

transmission and distribution. With respect to the Debtors, Sabre manufactures and delivers in the 

ordinary course of business various steel utility poles to the Debtors. 

Case: 19-30088 Doc# 3060 Filed: 07/18/19 Entered: 07/18/19 13:40:25 Page 1 of

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134480.00100/121260012v.2 2 

OBJECTION TO DEBTORS’ NOTICE OF PROPOSED TREATMENT OF RECLAMATION CLAIMS 

Prior to the Petition Date, Sabre manufactured certain steel poles at the direct request of 

PG&E, including under order numbers 19-418351, 19-418579, 19-418687, 19-418762, and 19-

418823. Each of the poles manufactured by Sabre have unique identifiers that are welded on the 

bottom of the poles that distinguish the poles from each other and similarly situated products. 

Thereafter, in late December 2018 and early January 2019, the poles were shipped, delivered and 

inspected by the Debtors. 

On February 13, 2019, Sabre informed the Debtors of its reclamation claim by overnight mail 

and electronic mail (the “Sabre Demand Letter”). A copy of which is attached hereto as Exhibit 1. 

In the Sabre Demand Letter, Sabre sought to reclaim no less than $371,556.90 in goods (the 

“Goods”) delivered to the Debtors in the 45 days prior to the Petition Date. Specifically, Sabre 

sought to reclaim the following: 

On February 19, 2019, Sabre filed its Notice of Filing of Reclamation Demand [Dkt. No. 

476] attaching a copy of the Sabre Demand Letter. [Dkt. No. 476]. 

On February 28, 2019, the Court entered an order (the “Reclamation Procedures Order”) 

establishing certain procedures for the treatment of all claims seeking reclamation of goods pursuant 

to section 546(c) of the Bankruptcy Code. 

On June 28, 2019, in accordance with the Reclamation Procedures Order, the Debtors filed 

the Notice which asserts that the entire amount of Sabre’s reclamation claim is invalid because (a) it 

includes freight, taxes, or similar charges, and (b) that the Goods were consumed prior to the receipt 

Case: 19-30088 Doc# 3060 Filed: 07/18/19 Entered: 07/18/19 13:40:25 Page 2 of

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134480.00100/121260012v.2 3 

OBJECTION TO DEBTORS’ NOTICE OF PROPOSED TREATMENT OF RECLAMATION CLAIMS 

of the Sabre Demand Letter or were unidentifiable. As more fully set forth below, the Goods were 

and still are readily identifiable and still in the Debtor’s possession. As a result, Sabre is entitled to 

either reclaim the Goods or an administrative claim in the amount of the value of the Goods. 

OBJECTION 

The elements necessary for a valid reclamation claim include: (i) the goods were sold to the 

debtor in the ordinary course of business, (ii) the debtor was insolvent when the goods were 

delivered, (iii) a written demand in accordance with the applicable statute was timely delivered, and 

(iv) the goods were identifiable and in the debtor’s possession at the time the reclamation demand 

was received by the debtor. 1 In re Mayer Pollack Steel Corp., 157 B.R. 952, 959 (Bankr. E.D. Pa. 

1993). Here, the Debtors do not dispute that the Goods were sold in the ordinary course of business, 

that the Debtors were insolvent when the goods were delivered, or that the goods were not in their 

possession at the time of the Sabre Demand Letter. Rather, the Debtors base their objection on the 

fact that the Goods were “consumed or not identifiable.” This contention is wholly without merit. 

In fact, the Debtors have not provided a single factual allegation or document evidencing their 

assertion that the Goods were “consumed” and no longer identifiable. 

Goods are identifiable when they actually exist, are intact, are capable of being physically 

recognized, and have not been converted into a different finished product. See In re Dana Corp., 

367 B.R. 409, 418 (Bankr. S.D.N.Y. 2007); In re Lawrence Paperboard Corp., 52 B.R. 907, 910 

(Bankr. D. Mass. 1985). Further, if the good is under a debtor’s “control then it is both ‘identifiable’ 

and ‘in the possession of the debtor.’” In re Charter Co., 54 B.R. 91, 93 (Bankr. M.D. Fla. 1985). 

Courts have also stated that if a reclaiming creditor can devise a formula by which they can trace the 

good, establish the time frame the good was delivered to the debtor, and can show the formula traces 

the product within that time frame with accuracy, then the seller need not physically identify the 

goods to sustain a reclamation claim. See In re Braniff, 113 B.R. 745, 755 (Bankr. M.D. Fla. 1990). 

 

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 The requirement that goods be “identifiable” is not found in the plain language of Uniform Commercial Code section 

2–702 nor in Bankruptcy Code section 546(c). See In re Hechinger Inv. Co. of Delaware, Inc., 274 B.R. 402, 407 

(Bankr. D. Del. 2001). 

Case: 19-30088 Doc# 3060 Filed: 07/18/19 Entered: 07/18/19 13:40:25 Page 3 of

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134480.00100/121260012v.2 4 

OBJECTION TO DEBTORS’ NOTICE OF PROPOSED TREATMENT OF RECLAMATION CLAIMS 

Sabre need not devise a formula to trace the Goods for its reclamation claim to be successful 

because, here, the Goods are readily identifiable as the poles are intact, physically recognizable by 

Sabre, and in the Debtors’ control. Further, the poles are branded with unique identifiers that allow 

Sabre (and the Debtors) to easily find them. For example, the poles are welded with an ID tag 

substantially similar to the image below: 

Additionally, attached hereto as Exhibit 2 is a listing of the ID tag numbers for the poles referenced 

in the Sabre Demand Letter. Therefore, the poles are clearly identifiable for purposes of Sabre’s 

reclamation claim. 

The only two cases cited by the Debtors are distinguishable. In re Arlco, Inc., 239 B.R. 261, 

265 (Bankr. S.D.N.Y. 1999); In re Landy Beef Co., Inc., 30 B.R. 19 (Bankr. D. Mass. 1983). The 

creditors in Arlco and Landy Beef who sought reclamation were suppliers or manufacturers of raw 

materials (textiles and calve-livers) that the Debtors’ processed into different finished products. 

Here, Sabre manufactured and delivered finished goods with no further manufacturing needed and 

the Debtors did not convert the poles into a finished product. Instead, after delivery, PG&E affixes 

the poles to the ground and fastens third-party devices to the poles. Such activity, however, does 

not render Sabre’s Goods as non-identifiable. These devices can be removed from the poles and the 

poles themselves can removed from the ground. Thus, the Goods are capable of being returned to 

Sabre and are reclaimable. 

Moreover, affixing third-party items a pole does not commingle the goods or destroy a 

supplier’s reclamation claim where a supplier’s goods remain readily identifiable. See Charter, 54 

BR at 91. For example, in Charter the Court found that commingled crude oil was subject to 

reclamation where the oil was identifiable (i.e., the goods are traceable and of similar kind and 

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134480.00100/121260012v.2 5 

OBJECTION TO DEBTORS’ NOTICE OF PROPOSED TREATMENT OF RECLAMATION CLAIMS 

grade). Id; see also In re Wheeling-Pittsburgh Steel Corp., 74 B.R. 656 (Bankr. W.D. Pa. 1987) 

(finding that coal that was commingled, but not converted into finished product, could be reclaimed 

because it was traceable). Here, even if the Debtors installed or, as the Debtors assert “consumed,” 

Sabre’s Goods, the poles remain readily identifiable. 

Finally, section 546(c) also affords a bankruptcy court broad discretion to substitute an 

administrative claim or lien in place of the right to reclaim. This discretion gives the court needed 

flexibility and permits it to recognize the reclaiming creditor’s rights while allowing the debtor the 

opportunity to retain the goods in order to facilitate the reorganization effort. If the Debtors do not 

want to return Sabre’s Goods, then Sabre should be granted an administrative claim in the value 

equal to the Goods. 

CONCLUSION 

 WHEREFORE, Sabre hereby requests that an order be entered either (a) authorizing the 

reclamation of the Goods or (b) granting Sabre an administrative claim in amount equal to the value 

of the Goods, and such other or further relief as is just and appropriate under the circumstances. 

DATED: 07/18/2019 BLANK ROME LLP 

 By: /s/ Jonathan A. Loeb 

 Jonathan A. Loeb 

 

Attorneys for Sabre Industries, Inc. 

Case: 19-30088 Doc# 3060 Filed: 07/18/19 Entered: 07/18/19 13:40:25 Page 5 of

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