Document Type
Research Memorandum
Publication Date
2024
Abstract
(Excerpt)
Under Section 503(b)(9) of title 11 of the United States Code (the "Bankruptcy Code"), the value of goods received by a debtor in the ordinary course of business, within 20 days before the date of commencement of a case, can be granted administrative priority status. Bankruptcy courts have grappled with settling on a definition of "goods" because neither Section 503(b)(9) nor the Bankruptcy Code at large define "goods." While the definition of "goods" is a matter of federal interpretation because Section 503(b)(9) of the Bankruptcy Code is federal law, "bankruptcy courts have almost without exception looked to the Uniform Commercial Code’s (“U.C.C.”) definition of goods." Article 2 of the U.C.C. defines goods as "things which are moveable at the time of identification to the contract" and is the definition that has been adopted by bankruptcy courts.
This memorandum explores whether electric energy falls under the U.C.C. Article 2 definition of "goods" for purposes of Section 503(b)(9) of the Bankruptcy Code. Part I examines how bankruptcy courts have relied on the U.C.C.’s definition of goods. Part II discusses the circuit split on the issue of whether electric energy is a "good" under the U.C.C.’s definition. Ultimately, there is a fifty percent lower court split, without a majority or minority of courts deciding one way or the other. Courts that have found electric energy not to be a good have done so because it is not movable at the time of identification to the contract and is more akin to a service. Courts that have found electric energy is a good have done so when it is metered and can therefore be identifiable to the contract.