In In re Plastech Engineered Products Inc., the U.S. Bankruptcy Court for the Eastern District of Michigan held that the Uniform Commercial Code’s definition of “goods” applies in determining whether a claim is entitled to administrative expense priority under Section 503(b)(9) of the Bankruptcy Code, which grants such priority to claims for the value of goods received by the debtor within 20 days before the petition date. The court ultimately allowed administrative expense priority claims to four creditors for the value of goods received by the debtors within 20 days before the petition date but denied priority status for any labor or services rendered in connection with the creditors’ deliveries of those goods.
In reaching its conclusion, the court also held that the “predominant purpose test” (used outside the bankruptcy context to determine whether a contract is primarily for the sale of goods or for the sale of services) does not apply to the analysis under Section 503(b)(9) because the only relevant determination under Section 503(b)(9) is the value of the goods received, regardless of whether the underlying agreement also provides for the sale of services.
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