A trade creditor's ability to assert an administrative claim from a debtor's post-petition rejection of pre-petition purchase orders: Not so fast! (Credit Column).(Bradlees Stores Inc.)

Introduction

A trade creditor's customer has just filed for bankruptcy. Prior to the bankruptcy, the customer had placed an order for the purchase of goods with the creditor. Then, following the bankruptcy, after the creditor had incurred the expense of manufacturing or purchasing the goods and was ready to deliver the goods, the customer cancelled the purchase order. The customer might have been responding to a declining market for the goods, or to a cancellation of a contract to sell the goods to its own customer. In either situation, the customer was using the cancellation to pass its loss on the sale onto the seller.

Or, as in the recent case ...