In re Emery Corp.
United States Bankruptcy Court for the Eastern District of Pennsylvania
38 B.R. 489 (1984)
Emery Corp. (Emery) (defendant) had security agreements giving various creditors liens in its after-acquired property; just two days before filing for bankruptcy, Emery bought over $10,000 in yarn on credit from Lavonia Manufacturing (Lavonia) (plaintiff), which then demanded the yarn's return upon learning of Emery's insolvency. In the bankruptcy proceeding, Lavonia and Emery's other, preexisting secured creditors disputed who was entitled to the yarn, since the after-acquired-property clauses would ordinarily give those other creditors security interests in the newly delivered yarn.
Whether a seller's UCC right to reclaim goods sold on credit to an insolvent buyer takes priority over preexisting secured creditors whose after-acquired-property liens attach to those same goods only once the goods are delivered.