                                     In the

    United States Court of Appeals
                    For the Seventh Circuit
                        ____________________
No. 18-3363
IN RE:
          HHGREGG, INC., et   al.,
                                                              Debtors.

WHIRLPOOL CORPORATION,
                                                   Plaintiff-Appellant,

                                       v.

WELLS FARGO BANK, NATIONAL ASSOCIATION,
and GACP FINANCE CO., LLC,
                                   Defendants-Appellees.
                        ____________________

            Appeal from the United States District Court for the
             Southern District of Indiana, Indianapolis Division.
         No. 1:17-cv-4662-WTL-TAB — William T. Lawrence, Judge.
                        ____________________

  ARGUED SEPTEMBER 5, 2019 — DECIDED FEBRUARY 11, 2020
                ____________________

   Before SYKES, HAMILTON, and SCUDDER, Circuit Judges.
   SYKES, Circuit Judge. This is an appeal from an adversary
proceeding in a Chapter 11 bankruptcy and concerns a trade
creditor’s right to reclaim goods it sold to the debtor on the
2                                                     No. 18-3363

eve of bankruptcy. The question is whether the seller’s
reclamation claim is superior to the claims of secured lend-
ers—more specifically, the lenders that extended debtor-in-
possession financing in exchange for a priming, first-priority
floating lien on existing and after-acquired inventory.
    The debtor is appliance retailer hhgregg, Inc. 1 Whirlpool
Corporation, a longtime supplier, delivered appliances to
hhgregg during the period just before the bankruptcy filing.
Wells Fargo Bank, as administrative agent for several lend-
ers, extended operating financing to hhgregg in the years
leading up to the bankruptcy. Under the prepetition credit
agreement, Wells Fargo’s advances were secured by a first-
priority floating lien on nearly all of hhgregg’s assets, in-
cluding existing and after-acquired inventory and its pro-
ceeds.
    In the first 24 hours of the Chapter 11 proceeding,
hhgregg sought the court’s approval for $80 million in
debtor-in-possession (“DIP”) financing, with Wells Fargo
now acting as administrative agent for a group of postpeti-
tion lenders. The DIP financing agreement authorized a
“creeping roll-up” of the secured lenders’ prepetition debt
and gave Wells Fargo a priming, first-priority floating lien
on substantially all of hhgregg’s assets, including existing
and after-acquired inventory and its proceeds. The bank-
ruptcy judge approved the DIP financing that same day.
   Three days later Whirlpool sent a reclamation demand to
hhgregg seeking the return of appliances it had delivered in
the 45-day period before the bankruptcy petition. Whirlpool

1The bankruptcy proceeding involves three related hhgregg companies.
We refer to them collectively as “hhgregg.”
No. 18-3363                                                     3

later filed an adversary action against Wells Fargo seeking a
declaration that its reclamation claim is first in priority as to
the reclaimed goods. Wells Fargo moved to dismiss. The
bankruptcy judge treated the motion as one for summary
judgment and entered final judgment for Wells Fargo. The
district court affirmed.
    We likewise affirm. Reclamation is a limited in rem rem-
edy that permits a seller to recover possession of goods
delivered to an insolvent purchaser—subject, however, to
significant temporal, procedural, and substantive re-
strictions. It is not the same as a purchase money security
interest. The remedy appears in Article 2 of the Uniform
Commercial Code—not Article 9—and is codified in the
relevant state’s version of U.C.C. § 2-702. Within bankruptcy
a reclamation claim is governed by 11 U.S.C. § 546(c).
    The Bankruptcy Abuse Prevention and Consumer Protec-
tion Act of 2005 (“BAPCPA” or “the 2005 amendments”)
made important changes to § 546(c). Before BAPCPA most
bankruptcy courts applied a “prior lien defense” drawn
from the U.C.C.’s substantive limitations on the reclamation
remedy, subordinating the seller’s reclamation claim to a
secured lender’s floating lien on the debtor’s inventory. The
2005 amendments adopted that norm as a federal priority
rule: under BAPCPA a seller’s right to reclaim goods is
“subject to the prior rights of a holder of a security interest in
such goods or the proceeds thereof.” § 546(c).
   Wells Fargo, as agent for the postpetition lenders, holds a
priming, first-priority lien on hhgregg’s existing and after-
acquired inventory and its proceeds under the DIP financing
agreement, approved by the court in the first 24 hours of the
Chapter 11 proceeding. By operation of § 546(c), Whirlpool’s
4                                                           No. 18-3363

later-in-time reclamation demand is “subject to” Wells
Fargo’s prior rights as a secured creditor, so its reclamation
claim is subordinate to the DIP financing lien.
                            I. Background
    In March 2011 Wells Fargo, as administrative and collat-
eral agent for a consortium of financial institutions, entered
into a loan and security agreement with hhgregg to provide
the retailer with operating credit. The security agreement
gave Wells Fargo a first-priority, floating lien on nearly all of
hhgregg’s assets, including existing and after-acquired
inventory and its proceeds. This security interest was valid,
perfected, and enforceable, so Whirlpool’s subsequent
deliveries to hhgregg were made subject to Wells Fargo’s
lien.
    On March 6, 2017, hhgregg petitioned for Chapter 11
bankruptcy in the Southern District of Indiana. As of the
petition date, hhgregg owed Wells Fargo at least $66 million
under the prepetition credit facility. That same day hhgregg
entered into an agreement with Wells Fargo to obtain DIP
financing. The agreement was similar in form and function
to the prepetition credit facility. Wells Fargo, as agent for a
group of postpetition lenders, 2 agreed to extend $80 million
in DIP financing in return for a priming, first-priority securi-
ty interest on substantially all of hhgregg’s assets, including
existing and after-acquired inventory and its proceeds.


2 GACP Finance Co., LLC, as agent for certain first-in last-out lenders, is
also a party to the DIP financing agreement and a defendant in this
adversary action. Because the interests of the two financial institutions
align and they have proceeded jointly on appeal, we refer to them
together as “Wells Fargo.”
No. 18-3363                                                  5

    DIP financing is crucial to a Chapter 11 debtor because it
provides desperately needed operating cash during the
reorganization bankruptcy process. But lending to a compa-
ny in bankruptcy necessarily carries high risk, so a DIP
lender requires special security. A bankruptcy judge may
approve a debtor’s grant of a senior lien to a DIP lender
provided the judge determines that the debtor is unable to
obtain other financing and the interests of preexisting
lienholders will be adequately protected. See 11 U.S.C.
§ 364(d). Since postpetition financing is so valuable and
difficult to obtain, a bankruptcy judge can authorize a debtor
to grant a DIP lender a priming, first-priority lien—a lien
that leapfrogs over preexisting liens to top priority. Id.
    Early on March 7, hhgregg moved for interim approval
of the March 6 DIP financing agreement. The bankruptcy
judge granted the motion that same day. The judge’s interim
order implemented the March 6 DIP financing agreement
and gave Wells Fargo a comprehensive, super-priority
security interest in hhgregg’s assets, subordinating its prepe-
tition lien. More to the point here, Wells Fargo obtained a
“priming first priority, continuing, valid, binding, enforcea-
ble, non-avoidable, and automatically perfected” lien on
hhgregg’s assets, including existing and after-acquired
inventory and its proceeds. The lien was “effective immedi-
ately upon the entry of this Interim Order” and is “senior
and superior in priority to all other secured and unsecured
creditors.” The DIP financing order also authorized a “creep-
ing roll-up” of the prepetition lenders’ secured debt.
   Upon entry of the interim order, the DIP lenders imme-
diately funded their $80 million loan obligations. On May 2,
6                                                  No. 18-3363

following notice and hearings, the bankruptcy judge entered
a final order approving the DIP financing.
    Before the bankruptcy filing, Whirlpool delivered home
appliances to hhgregg on credit for resale in its retail stores.
On March 10, 2017—three days after entry of the interim
order approving the DIP financing—Whirlpool sent a recla-
mation demand seeking the return of approximately
$16.3 million of unpaid inventory delivered to hhgregg in
the 45-day period before the petition date. Whirlpool later
filed a limited objection to the interim DIP order alerting the
court to its reclamation demand and citing § 546(c). Mean-
while, the reorganization plan called for hhgregg to sell
existing inventory—including the Whirlpool reclaimed
goods—and apply the proceeds to the prepetition debt owed
to Wells Fargo.
    In April Whirlpool filed an adversary complaint against
hhgregg and Wells Fargo seeking a declaration that its
reclamation claim was first in priority as to the reclaimed
goods. Among other things, the complaint alleged that Wells
Fargo had not acted in good faith because it knew hhgregg
was insolvent and yet continued to provide financing,
allowing hhgregg to acquire additional inventory from
suppliers like Whirlpool in order to expand Wells Fargo’s
own collateral base.
    Events in the bankruptcy unfolded quickly. Reorganiza-
tion proved unsuccessful, and on April 7, May 10, and
May 17, the bankruptcy judge entered orders authorizing
hhgregg to sell its inventory—including the Whirlpool
goods—in going-out-of-business sales. Whirlpool objected to
the sale of the reclaimed goods. To facilitate the proposed
liquidation, the judge’s April 7 sale order reserved
No. 18-3363                                                  7

Whirlpool’s reclamation claim, which was “deemed to attach
to any proceeds of Whirlpool Goods” but “with the same
validity, defects and priority, and/or lack of any of the
foregoing” as before the order. By the time of the court’s
May 2 final approval of the DIP financing, the prepetition
secured debt was paid in full pursuant to the “final roll-up”
specified in the interim DIP financing order, extinguishing
Wells Fargo’s prepetition lien.
    On May 18 Wells Fargo moved to dismiss Whirlpool’s
adversary complaint, relying in part on the contents of the
final DIP financing order. The bankruptcy judge was uncer-
tain about the extent to which he could take judicial notice of
factual material contained within his prior orders, so he
treated Wells Fargo’s motion as one for summary judgment
and gave the parties an opportunity to supplement their
submissions as required by Rule 12(d) of the Federal Rules
of Civil Procedure (incorporated by Rule 7012 of the Federal
Rules of Bankruptcy Procedure). Hhgregg, for its part,
answered Whirlpool’s complaint and asserted counter-
claims.
    After reviewing the supplemental submissions, the judge
entered summary judgment for Wells Fargo. He began by
tracing the interplay between U.C.C. § 2-702, which governs
reclamation claims outside bankruptcy, and 11 U.S.C.
§ 546(c), which governs reclamation claims within bankrupt-
cy. Under section 2-702 a seller’s right to reclaim goods
delivered to an insolvent purchaser has strict temporal and
procedural requirements and as a substantive matter is
“subject to the rights of a buyer in ordinary course or other
good faith purchaser.” U.C.C. § 2-702(3) (AM. LAW INST. &
UNIF. LAW COMM’N 1966); IND. CODE § 26-1-2-702(3) (as
8                                                    No. 18-3363

adopted in Indiana). The judge noted that “[m]any [bank-
ruptcy] courts have treated the holder of a prior perfected,
floating lien on inventory as a ‘good faith purchaser’ for
purposes of [section] 2-702(3), largely relying on the defini-
tion[s] of ‘purchase’ and ‘purchaser’” in the U.C.C. In re
hhgregg, Inc., 578 B.R. 814, 818 (Bankr. S.D. Ind. 2017) (citing
In re Arlco, Inc., 239 B.R. 261, 267–68 (Bankr. S.D.N.Y. 1999)
(collecting cases)).
   As the judge explained, the 2005 amendments to the
Bankruptcy Code made that type of analysis obsolete: the
revised § 546(c) expressly makes a seller’s reclamation right
“subject to the prior rights of a holder of a security interest in
such goods or the proceeds thereof.” The judge reasoned
that “[a]s amended [in 2005], § 546(c) explicitly renders an
otherwise valid reclamation claim under state law subordi-
nate to a secured creditor’s prior lien rights—without refer-
ence or resort to the [U.C.C.] to ascertain whether the
secured creditor is a good faith purchaser.” Id. at 819.
   Applying this understanding, the judge held that Wells
Fargo’s “lien chain … remains unbroken and prior to
Whirlpool’s reclamation demand.” Id. at 820. Before and on
the March 6 petition date, Wells Fargo held a first-priority,
perfected floating lien on hhgregg’s assets pursuant to the
prepetition credit facility. By the terms of the court’s March 7
DIP financing order, Wells Fargo obtained a priming, first-
priority, perfected lien on hhgregg’s assets, effective imme-
diately. Id. So “[w]hen Whirlpool made its reclamation
demand[,] the Whirlpool Goods were encumbered by the
DIP Lenders’ and Wells Fargo’s prior interests.” Id. Because
a reclamation demand is “subject to” the prior rights of
secured creditors under the express terms of § 546(c), the
No. 18-3363                                                 9

judge subordinated Whirlpool’s claim to Wells Fargo’s DIP
financing lien. Id.
   The claims and counterclaims between Whirlpool and
hhgregg remained, but the judge found no just reason for
delay and entered final judgment for Wells Fargo, authoriz-
ing Whirlpool to take an immediate appeal to the district
court. The district judge affirmed, largely adopting the
bankruptcy judge’s reasoning.
                       II. Discussion
    Whirlpool asks us to hold that its reclamation claim is
first in priority as to the reclaimed goods, ahead of Wells
Fargo’s DIP financing lien. Alternatively, Whirlpool seeks a
remand to establish that Wells Fargo did not act in good
faith and thus does not have prior rights as a good-faith
purchaser under Indiana’s version of U.C.C. § 2-702. (Recall
that the bankruptcy judge did not address this question,
holding instead that a “good-faith purchaser” inquiry under
the U.C.C. is unnecessary in light of the 2005 amendments to
§ 546(c).)
    First, a few words about the standard of review. A sum-
mary judgment in a bankruptcy adversary proceeding is
treated as any other summary judgment, so our review is de
novo. Doe v. Archdiocese of Milwaukee, 772 F.3d 437, 440 (7th
Cir. 2014). Wells Fargo argues for the more deferential clear-
error standard, drawing an analogy to a strand in our circuit
caselaw involving summary judgments in cases raising
ERISA claims. Briefly stated, because ERISA authorizes
equitable relief and there is no right to a jury trial, we’ve
held that when a district court resolves the claim on sum-
mary judgment and the only issue is the characterization of
10                                                    No. 18-3363

the undisputed subsidiary facts, the judge’s ruling is best
understood as presenting a mixed question of law and fact
and reviewed for clear error. See, e.g., Cent. States, Se. & Sw.
Areas Pension Fund v. Nagy, 714 F.3d 545, 549–50 (7th Cir.
2013); see also French v. Wachovia Bank, N.A., 722 F.3d 1079,
1084–85 (7th Cir. 2013) (explaining our practice in the ERISA
context but declining to extend it to a case involving a
summary judgment in a common-law claim for breach of
fiduciary duty).
    That reasoning does not apply here. Although the mate-
rial facts are undisputed, we’re not reviewing the bankrupt-
cy court’s characterization of the facts. Rather, the appeal
presents a legal issue regarding the operation of the 2005
amendments to § 546(c). We see no reason to treat the bank-
ruptcy judge’s order any differently than an ordinary sum-
mary judgment. Our review is plenary, though we benefit
from the work of the bankruptcy and district judges.
    We begin with some background on the right of reclama-
tion both outside and within bankruptcy.
A. Reclamation Outside Bankruptcy
    Reclamation is a limited in rem remedy that permits a
seller to regain possession of goods delivered to an insolvent
purchaser on credit. See In re Pester Ref. Co., 964 F.2d 842, 844
(8th Cir. 1992); In re Circuit City Stores, Inc., 441 B.R. 496, 510–
11 (Bankr. E.D. Va. 2010); In re Dana Corp., 367 B.R. 409, 419
(Bankr. S.D.N.Y. 2007). “It is a rescissional remedy, based
upon the theory that the seller has been defrauded. Indeed,
at common law and under the Uniform Sales Act, the seller
could only reclaim goods by proving that the buyer fraudu-
No. 18-3363                                                    11

lently induced delivery by misrepresenting its solvency.” In
re Pester, 964 F.2d at 844.
    The Uniform Commercial Code codified the remedy in a
different form, removing the requirement to prove fraudu-
lent inducement—but only for a small set of time-limited
claims. Under section 2-702(2), a credit seller may reclaim
goods delivered to an insolvent buyer provided a demand for
reclamation is made within ten days of the buyer’s receipt of
the goods; if the buyer made a written misrepresentation of
solvency in the three months before delivery, the ten-day
limit does not apply. In addition to these temporal and
procedural qualifiers, the U.C.C. remedy is substantively
limited: a seller’s reclamation right is subject to the rights of
buyers in the ordinary course and other good-faith purchas-
ers. U.C.C. § 2-702(3).
      Here is the relevant text of the U.C.C. reclamation reme-
dy:
         Seller’s Remedies on Discovery of Buyer’s
         Insolvency
         …
         (2) Where the seller discovers that the buyer
         has received goods on credit while insolvent[,]
         he may reclaim the goods upon demand made
         within ten days after the receipt, but if misrep-
         resentation of solvency has been made to the
         particular seller in writing within three months
         before delivery[,] the ten day limitation does
         not apply. …
         (3) The seller’s right to reclaim under subsec-
         tion (2) is subject to the rights of a buyer in or-
12                                                 No. 18-3363

        dinary course or other good faith purchas-
        er … .
U.C.C. § 2-702. The corresponding provision in Indiana is
identical. IND. CODE § 26-1-2-702.
     The commentary to section 2-702 explains that the reme-
dy
        takes as its base line the proposition that any
        receipt of goods on credit by an insolvent buy-
        er amounts to a tacit business misrepresenta-
        tion of solvency and therefore is fraudulent as
        against the particular seller. This Article makes
        discovery of the buyer’s insolvency and de-
        mand within a ten day period a condition of
        the right to reclaim goods on this ground.
U.C.C. § 2-702 cmt. 2.
B. Reclamation Within Bankruptcy
   Within bankruptcy, reclamation has a checkered history.
Prior to the Bankruptcy Reform Act of 1978, it was unclear
whether the trustee could use his various strong-arm powers
against a trade creditor’s section 2-702 reclamation claim. See
5 COLLIER ON BANKRUPTCY (“COLLIER”) ¶ 546.LH[3] (16th
ed.); Lawrence Ponoroff, Reclaim This! Getting Credit Seller
Rights in Bankruptcy Right, 48 U. RICH. L. REV. 733, 739–46
(2014). In response, the 1978 Act added a new subpart to
11 U.S.C. § 546, the section of the Bankruptcy Code that sets
limits on the trustee’s avoidance powers.
   Because the Code’s reclamation provision is stated as a
limitation on the trustee’s powers, the language is a bit
clunky; we paraphrase here. As originally adopted, § 546(c)
No. 18-3363                                                   13

declared that the trustee’s rights and powers under § 544(a)
(the strong-arm provision), § 545 (statutory liens), § 547
(preferences), and § 549 (postpetition transactions) were
“subject to any statutory right or common-law right of a
seller … of goods … to reclaim such goods if the debtor has
received such goods while insolvent” provided the seller
made written demand for reclamation within “ten days after
receipt of such goods by the debtor.” Bankruptcy Reform
Act of 1978, Pub. L. No. 95-598, § 546(c)(1), 92 Stat. 2549,
2597.
    In its original form, § 546(c) preserved the bankruptcy
court’s flexibility to facilitate reorganization by authorizing a
substitute remedy: the court could deny an otherwise valid
reclamation demand (thus leaving the goods in the estate) if
it granted the seller an administrative expense claim (these
are governed by 11 U.S.C. § 503(b)) or secured the claim with
a lien. Id. § 546(c)(2); see also COLLIER ¶ 546.LH[3]. A later
amendment to § 546(c) extended the deadline for written
notice to 20 days if the ten-day period expired after com-
mencement of the bankruptcy case. Bankruptcy Reform Act
of 1994, Pub. L. No. 103-394, § 209, 108 Stat. 4106, 4125; see
also COLLIER ¶ 546.LH[3].
    Before BAPCPA, bankruptcy courts struggled to resolve
conflicts between claims of reclaiming sellers under § 546(c)
and claims of secured lenders holding floating liens on the
debtor’s inventory. As originally enacted § 546(c) did not
address the effect of a prior lien on the rights of a reclaiming
seller. So judges looked to state-law rules—specifically, the
relevant state’s version of section 2-702. As we’ve explained,
under section 2-702(3) the right of a seller to reclaim goods is
“subject to the rights of a buyer in ordinary course or other
14                                                    No. 18-3363

good faith purchaser.” A “purchaser” is “a person that takes
by purchase,” U.C.C. § 1-201(b)(30) (AM. LAW INST. & UNIF.
LAW COMM’N 2001), and “purchase” means “taking by sale,
lease, discount, negotiation, mortgage, pledge, lien, security
interest, issue or reissue, gift, or any other voluntary transac-
tion creating an interest in property,” id. § 1-201(b)(29)
(emphasis added).
    Extrapolating from these broad definitions, the prevail-
ing view was that “[s]ince most secured creditors are good
faith purchasers under the [U.C.C.],” section 2-702(3) “has
the effect, in priority terms, of placing the reclaiming seller
behind the insolvent buyer’s secured creditors who have
security interests in the goods, but ahead of the buyer’s
unsecured creditors.” In re Pester, 964 F.2d at 845; see general-
ly Charles J. Shaw & Brent Weisenberg, Effect of a Preexisting
Security Interest in the Debtor’s Inventory on the Rights of
Reclamation Creditors, 2005 NORTON ANN. SURV. OF BANKR. L.
15 (collecting pre-BAPCPA cases). We noted this trend in the
caselaw more than two decades ago but did not weigh in. In
re Reliable Drug Stores, Inc., 70 F.3d 948, 949–50 (7th Cir.
1995). In Reliable Drug Stores the seller conceded that “a
reclamation claimant stands in line after a creditor with a
security interest in after-acquired inventory.” Id. at 950.
   Congress addressed this issue in 2005 when it enacted
BAPCPA, which substantially reworked § 546(c). The statu-
tory language is still clunky—more so in fact. For complete-
ness we include the relevant text in full:
       (c)(1) … subject to the prior rights of a holder of a
       security interest in such goods or the proceeds
       thereof, the rights and powers of the trustee un-
       der sections 544(a), 545, 547, and 549 are sub-
No. 18-3363                                                    15

       ject to the right of a seller of goods that has
       sold goods to the debtor, in the ordinary
       course of such seller’s business, to reclaim such
       goods if the debtor has received such goods
       while insolvent, within 45 days before the date
       of the commencement of a case under this title,
       but such seller may not reclaim such goods un-
       less such seller demands in writing reclama-
       tion of such goods—
          (A) not later than 45 days after the date of
          receipt of such goods by the debtor; or
          (B) not later than 20 days after the date of
          commencement of the case, if the 45-day
          period expires after the commencement of
          the case.
       (2) If a seller of goods fails to provide notice in
       the manner described in paragraph (1), the
       seller still may assert the rights contained in
       section 503(b)(9).
§ 546(c) (emphasis added).
    Among other key modifications to the statute, the 2005
amendments (1) omitted the prior version’s reference to
statutory or common-law reclamation rights; (2) enlarged
the reclamation look-back period from 10 to 45 days; (3) set a
hard deadline to serve a written reclamation demand at
20 days after the petition date; and (4) added new language
making explicit that a seller’s right to reclaim goods is
“subject to the prior rights of a holder of a security interest in
such goods or the proceeds thereof.” Id. One more notable
change: the substitute remedies in the earlier version of the
16                                                No. 18-3363

statute—an administrative expense claim or a lien—are
gone. Instead, subsection (c)(2) cross-references to a new
§ 503(b)(9), another BAPCPA innovation.
    Section 503(b) of the Code lists the allowable administra-
tive expenses that ordinarily enjoy priority in bankruptcy
over other unsecured claims; generally speaking, these are
costs incurred in the preservation and administration of the
estate. The 2005 amendments added a new subsection (b)(9),
which lists as an allowable administrative expense “the
value of any goods received by the debtor within 20 days
before the date of commencement of a case under this title in
which the goods have been sold to the debtor in the ordinary
course of such debtor’s business.” So by operation of the
cross-reference in § 546(c)(2), a reclaiming seller might have
an administrative expense claim for the value of goods
delivered to the debtor on days 1–20 before the start of the
bankruptcy case even if the seller fails to serve a timely
written reclamation demand and thus forfeits a claim to
recover goods delivered during the 45-day look-back period
under § 546(c)(1).
    Section 503(b)(9) raises its own set of interpretive and
application issues, but this appeal doesn’t require us to
address them. The only question here is whether Whirlpool’s
reclamation claim is subordinate to Wells Fargo’s DIP fi-
nancing lien. It is, for reasons we’ll turn to now.
C. BAPCPA’s § 546(c) Created a Federal Priority Rule
   As we’ve just explained, one of BAPCPA’s key changes
to § 546(c) was the adoption of a federal priority rule for
resolving disputes between reclaiming sellers and secured
lenders over the same goods. To the extent that priority was
No. 18-3363                                                 17

uncertain under the old version of § 546(c), after the 2005
amendments, it’s crystal clear that a seller’s reclamation
claim is subordinate to “the prior rights of a holder of a
security interest.” § 546(c)(1). What this means as a practical
matter is that “if the value of any given reclaiming supplier’s
goods does not exceed the amount of debt secured by the
prior lien, that reclamation claim is valueless.” In re Dana
Corp., 367 B.R. at 419; see also In re Reliable Drug Stores,
70 F.3d at 950 (explaining in a case governed by the pre-
BAPCPA statute that if the debtor’s secured lenders are
undersecured, the court “ha[s] no option other than to deem
[the reclaiming seller’s] administrative claim worthless”).
    Here, under the terms of the March 6 DIP financing
agreement and effective upon entry of the court’s March 7
interim DIP financing order, Wells Fargo obtained a prim-
ing, first-priority security interest in all hhgregg assets,
including the Whirlpool inventory. Whirlpool’s reclamation
demand came later, on March 10, and is therefore “subject
to” Wells Fargo’s prior rights as the holder of a perfected,
first-priority security interest in the reclaimed goods.
    Whirlpool counters that its reclamation claim was “in ef-
fect” as of the March 6 petition date (even though demand
was not made until March 10) and “jumped into first posi-
tion” during a “gap in the lien chain” that occurred between
March 6, when Wells Fargo’s prepetition security interest
was concededly superior, and March 7, when Wells Fargo’s
postpetition security interest attached pursuant to the court’s
DIP financing order. Whirlpool insists that its reclamation
claim jumped ahead of Wells Fargo’s DIP financing lien
when the prepetition lien was extinguished in the final roll-
up of the collateralized prepetition debt.
18                                                 No. 18-3363

    There are at least two problems with this argument. First,
a reclamation right is not a security interest; nor is the
reclamation remedy self-executing, either within or outside
bankruptcy. See In re Circuit City Stores, 441 B.R. at 505
(collecting cases). Absent a timely written demand, the seller
has no reclamation right under § 546(c)(1). Even under the
U.C.C., the right of reclamation is conditioned on a timely
demand, though it need not be in writing. U.C.C. § 2-702(2).
Whirlpool served its written reclamation demand on
March 10, three days after Wells Fargo’s postpetition lien
attached by order of the bankruptcy court. There is no
support for Whirlpool’s assertion that its reclamation claim
was actually “in effect” on the petition date, four days before
demand was made.
    Second, there was no gap in the Wells Fargo lien chain.
Before and as of the March 6 petition date, Wells Fargo held
a first-priority, perfected lien on hhgregg’s assets, including
the Whirlpool inventory. Effective March 7 Wells Fargo
obtained a court-approved, priming, first-priority, perfected
lien on hhgregg’s assets, including the Whirlpool inventory.
As the bankruptcy judge explained, the Whirlpool goods
were continuously encumbered by one or both of Wells
Fargo’s liens. Whirlpool’s reclamation claim did not spring
into first position when Wells Fargo’s prepetition lien was
extinguished in the final roll-up. The lien chain remained
unbroken.
    Whirlpool’s fallback argument is that the prior rights of a
secured creditor must be determined by reference to state
law—here, Indiana’s version of U.C.C. § 2-702, which (like
the uniform law) states that a seller’s right to reclaim goods
is “subject to the rights of a buyer in ordinary course or other
No. 18-3363                                                 19

good faith purchaser.” IND. CODE § 26-1-2-702. Whirlpool
insists that Wells Fargo cannot be considered a good-faith
purchaser based on its conduct as agent for the DIP lenders
and seeks a remand for an opportunity to litigate that ques-
tion.
    Whatever force this argument might have had under the
old version of § 546(c), with the 2005 amendments, the
rationale for examining the lienholder’s status as a good-
faith purchaser has evaporated. The post-BAPCPA text of
§ 546(c) expressly subordinates a seller’s reclamation claim to
the prior rights of a lienholder; there is neither need nor any
reason to import a state-law good-faith purchaser inquiry.
The bankruptcy judge therefore correctly concluded that
Whirlpool’s allegations of bad faith are irrelevant to the
priority determination under § 546(c).
    When Whirlpool made its reclamation demand on
March 10, the reclaimed goods were subject to Wells Fargo’s
prepetition and DIP financing liens. While the prepetition
lien was later lifted, the reclaimed goods remained subject to
Wells Fargo’s DIP financing lien. The bankruptcy judge
correctly subordinated Whirlpool’s reclamation claim to the
DIP financing lien.
                                                    AFFIRMED
