Pre-Petition Shipments Of Goods. BAPCPA created substantial additional rights for suppliers that sold goods to a debtor prior to the bankruptcy filing.  Section 503(b) of the Bankruptcy Code allows administrative-expense status to all claims for "the value of any goods" received in the ordinary course of business by a debtor within 20 days before the bankruptcy filing. The supplier must request administrative-expense status. By doing this, the supplier is in a better position than unsecured creditors to be paid, since a Chapter 11 plan of reorganization cannot be confirmed unless administrative claims are fully paid in cash on the effective date of the plan. Unsecured creditors typically receive only a fraction of their claims.

Reclamation Claims.Suppliers may now exercise their right to reclaim goods 45 days after the debtor's receipt of the goods under Section 546(c) of the Bankruptcy Code. Prior law limited the period for reclamation to 10 days after receipt of the goods. A written demand for reclamation of such goods must be made not later than 45 days after delivery. Suppliers must move quickly or their right to reclaim will be lost. If the 45-day period has not expired as of the filing of a bankruptcy case, a supplier will have an additional 20 days after the filing of the case to demand reclamation of the goods sold. A reclamation demand is "subject to the prior rights" of a holder of a security interest in the goods sold.

Preferences:  Small Claim Threshold and Venue. Creditors of a debtor who received small payments during the 90-day pre-bankruptcy preference look-back period are protected by BAPCPA.  Aggregate payments received by a creditor not exceeding $5,000 are now exempt from preference liability.  Also, creditors who have received potential preference payments in an amount less than $10,000 will no longer have to defend themselves in the home bankruptcy court of the debtor, which could be located in another state.  Instead, such preference actions must now be commenced in the creditor's home district.  

Preferences: Ordinary Course Defense. Prior to BAPCPA, to avoid preference liability, a creditor had to prove that the payment it received from the debtor was made in the ordinary course of business of both parties and that the payment was made in accordance with "ordinary" industry terms.  In other words, a creditor had to establish both defenses to prevail.  BAPCPA made it easier to defend a preference action, since a creditor now has to prove only one of the two defenses, thereby reducing the creditor's burden of proof.

The New Jersey Construction Lien Law (the “Lien Law”) replaced the old Mechanic's Lien Law in 1994. Neither of these laws is applicable to public projects. The new Lien Law (N.J.S.A. 2A:44A-1 et seq.) eliminated the filing of a Mechanic's Notice of Intent. Instead, it is necessary to file certain information within 90 days following the date of the last work, services, materials or equipment provided with the Clerk of the county in which the property is located.

A lien claim may only be filed if there is a written contract between the lien claimant and its customer (whether it be the owner, contractor or subcontractor). A lien claimant will lose any rights that it may have to enforce the lien, and the lien itself, if legal action is not instituted within one year of the date of the last work under the contract. The one-year time period starts from the time of last work or services provided, not from the date of the filing of the lien.

If the project is “commercial”, as opposed to “residential”, a lien claimant is entitled to, but is not required to, file a "Notice of Unpaid Balance and Right to File Lien" (NUB). A NUB is also filed with the Clerk of the county in which the property is located.

A lien claimant must take additional steps on a residential project. The Lien Law includes the following under the definition of residential: a one- or two-family dwelling; a condominium; a housing cooperative; and a townhouse development. However, the distinction between residential and commercial is not clear under the law, particularly with respect to work performed on common elements such as drainage and streets.

If work is done under a residential construction contract, the lien claimant must do more to insure that the lien is properly filed and perfected. These steps include: filing a NUB; serving a Demand for Arbitration under the American Arbitration Association program created for residential construction lien claims, and then, if successful in the Arbitration, filing the lien claim with the Clerk in the county in which the property is located. All of these steps must be completed within 90 days from the date of the last work, services, material or equipment provided.

Section 503(b) of the Bankruptcy Code allows administrative-expense status to all claims for "the value of any goods" received in the ordinary course of business by a debtor within 20 days before the bankruptcy filing. The supplier must request administrative-expense status. By doing this, the supplier is in a better position than unsecured creditors to be paid, since a Chapter 11 plan of reorganization cannot be confirmed unless administrative claims are paid in cash on the effective date of the plan. Unsecured creditors typically receive only a fraction of their claims.

Suppliers of goods have another method to be paid ahead of unsecured creditors. They may seek reclamation of goods sold to a debtor in the ordinary course of business under Section 546(c) of the Bankruptcy Code. A supplier must demand in writing reclamation of such goods not later than 45 days after delivery. Suppliers must move quickly or their right to reclaim will be lost. If the 45-day period has not expired as of the filing of a bankruptcy case, a supplier will have an additional 20 days after the filing of the case to demand reclamation of the goods sold. A reclamation demand is "subject to the prior rights" of a holder of a security interest in the goods sold.