UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE
In re:
CASCADIA HOME & LIFESTYLE INC.,
a Delaware corporation, EIN: 47-6138290,
Debtor.
Case No. 25-12087 (CMA)
Chapter 11
Related to Docket No. __
MOTION OF MERIDIAN CONSUMER BRANDS LLC FOR ALLOWANCE AND PAYMENT OF ADMINISTRATIVE EXPENSE CLAIM PURSUANT TO 11 U.S.C. § 503(b)(9)
I. PRELIMINARY STATEMENT
Meridian Consumer Brands LLC ("Meridian" or "MCB"), by and through its undersigned counsel, Calderwood & Harkness LLP, respectfully moves this Court (the "Motion") for entry of an order, substantially in the form attached hereto as Exhibit C (the "Proposed Order"), allowing and directing payment of an administrative expense claim in the amount of $1,847,200.00 pursuant to 11 U.S.C. § 503(b)(9). In support of this Motion, Meridian respectfully represents as follows:
The claim that is the subject of this Motion arises from goods sold by Meridian to Cascadia Home & Lifestyle Inc. (the "Debtor") in the ordinary course of business that were received by the Debtor within twenty (20) days before the petition date of October 14, 2025 (the "Petition Date") — specifically, goods that were physically delivered to and accepted by the Debtor at its distribution centers and retail locations between September 24, 2025 and October 14, 2025, inclusive. The goods at issue consisted of branded household cleaning products, personal care items, and small kitchen appliances — the same categories of products that Meridian has supplied to the Debtor for years as part of a well-established and longstanding trade relationship.
Meridian is one of the Debtor's largest trade creditors. As of the Petition Date, Meridian holds approximately $14,726,418.37 in total pre-petition trade receivables from the Debtor, comprised of eighty-three (83) unpaid invoices spanning the period from July 18, 2025 through October 10, 2025. No portion of these receivables has been paid. Of the total pre-petition receivables, the $1,847,200.00 in qualifying shipments that is the subject of this Motion represents a subset of those receivables and is entitled to administrative expense priority as a matter of statutory right under Section 503(b)(9) of the Bankruptcy Code. Section 503(b)(9) provides a clear, unambiguous mandate: the value of goods received by a debtor within twenty days before the commencement of a bankruptcy case, where such goods were sold to the debtor in the ordinary course of business, "shall" be allowed as an administrative expense. This statutory entitlement does not require proof of benefit to the estate, and the claim must be paid in full under any plan of reorganization pursuant to Section 1129(a)(9)(A) of the Bankruptcy Code.
This Motion is supported by the Declaration of Douglas Hargrove, Vice President of Finance of Meridian Consumer Brands LLC (the "Hargrove Declaration"), attached hereto as Exhibit A, and the Schedule of Qualifying Invoices and Shipments (the "Invoice Schedule"), attached hereto as Exhibit B. Together, these exhibits identify each qualifying shipment, provide corresponding delivery dates and invoice amounts, and confirm that the Debtor physically received goods with an aggregate invoice value of $1,847,200.00 within the statutory twenty-day window.
II. JURISDICTION AND VENUE
This Court has jurisdiction over this Motion pursuant to 28 U.S.C. §§ 157 and 1334 and the Amended Standing Order of Reference from the United States District Court for the District of Delaware, dated February 29, 2012. This is a core proceeding within the meaning of 28 U.S.C. § 157(b)(2)(A) (matters concerning the administration of the estate) and 28 U.S.C. § 157(b)(2)(B) (allowance or disallowance of claims against the estate). Venue is proper in this District pursuant to 28 U.S.C. §§ 1408 and 1409, as the Debtor is incorporated under the laws of the State of Delaware and filed its voluntary petition for relief in this Court.
The statutory basis for the relief requested herein is 11 U.S.C. § 503(b)(9), which provides for the allowance of the value of goods received by a debtor in the ordinary course of business within twenty days before the petition date as an administrative expense, and 11 U.S.C. § 507(a)(2), which accords second priority status to administrative expenses allowed under Section 503(b).
III. BACKGROUND
A. The Chapter 11 Case
On October 14, 2025 (the "Petition Date"), Cascadia Home & Lifestyle Inc. (the "Debtor") filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the District of Delaware, commencing the above-captioned case.
The Debtor is a Delaware corporation with its principal place of business and corporate headquarters located at 1200 NW Everett Street, Suite 800, Portland, Oregon 97209. The Debtor is a national home goods and lifestyle retailer that operates approximately 347 retail store locations across thirty-eight (38) states, as well as a significant e-commerce platform. The Debtor's stores operate under two primary brand banners: "Cascadia Home," which focuses on home furnishings, décor, kitchenware, and household products, and "Lifestyle by Cascadia," which offers a curated assortment of personal care, wellness, and lifestyle products. The Debtor was founded in 1994 by Roland Trask and grew from a single store in Portland, Oregon into one of the nation's leading specialty home goods retailers. The Debtor went public in 2006, listing its common stock on the New York Stock Exchange, before being taken private in 2019 by Pinecrest Equity Group LLC through its Fund III investment vehicle, Pinecrest Equity Partners III, LP, in a leveraged buyout valued at approximately $2.1 billion.
The Debtor continues to operate its business and manage its assets as debtor-in-possession pursuant to Sections 1107 and 1108 of the Bankruptcy Code. No trustee, examiner, or other fiduciary has been appointed in this case.
The Debtor's current senior management team includes Margaret "Meg" Fontaine, who serves as Chief Executive Officer; Vikram Patel, who serves as Chief Financial Officer; and Philip Kellner of Kellner & Associates LLC, who has been installed as Chief Restructuring Officer to oversee the Debtor's restructuring efforts and interface with key stakeholders. The Debtor is represented in this case by Brindoval Baines & Lord LLP, with Harrison Caldwell serving as lead restructuring partner, as its primary bankruptcy counsel, and by Borwick Sato LLP, with Michael Donnelly serving as lead Delaware attorney, as Delaware co-counsel. Ashworth Partners LLC, with Sandra Ng serving as lead engagement partner, serves as the Debtor's financial advisor and investment banker in connection with the Chapter 11 case.
On October 28, 2025, the Office of the United States Trustee for Region 3 appointed the Official Committee of Unsecured Creditors (the "Committee") pursuant to Section 1102 of the Bankruptcy Code. Meridian Consumer Brands LLC was appointed as a member of the Committee. The Committee is represented by Garvey & Holbrook LLP, with Diana Prescott serving as lead counsel, and Broadleaf Advisory Group LLC, with Robert Tanaka serving as lead advisor, as the Committee's financial advisor.
B. The Debtor's Capital Structure
As of the Petition Date, the Debtor's total funded indebtedness was approximately $1.379 billion, which constitutes a substantial and highly leveraged capital structure. The Debtor's funded debt is comprised of the following tranches:
First Lien Revolving Credit Facility. The Debtor is the borrower under a first lien revolving credit facility with total commitments of $225 million, of which approximately $189 million was drawn as of the Petition Date. Ridgeline National Bank, N.A. serves as administrative agent for the revolving credit facility lenders. The revolving facility is secured by a first priority lien on substantially all of the Debtor's assets, including inventory, accounts receivable, and other personal property.
First Lien Term Loan B. The Debtor is the borrower under a first lien term loan B credit facility with an outstanding principal balance of approximately $625 million as of the Petition Date (original principal amount of $700 million). The term loan B is secured on a pari passu basis with the revolving credit facility by a first priority lien on substantially all of the Debtor's assets.
Total First Lien Debt. As of the Petition Date, the Debtor's aggregate first lien secured indebtedness was approximately $814 million.
Second Lien Term Loan. The Debtor is also the borrower under a second lien term loan with an outstanding principal balance of approximately $350 million as of the Petition Date. Thornfield Capital Management LP serves as agent for the second lien lenders. The second lien term loan is secured by a second priority lien on substantially all of the Debtor's assets, junior and subordinate to the first lien obligations.
8.75% Senior Unsecured Notes Due 2027. The Debtor has outstanding $215 million in aggregate principal amount of 8.75% Senior Unsecured Notes due 2027, issued pursuant to an indenture with Pacific Continental Trust Company serving as indenture trustee. These notes are unsecured obligations of the Debtor.
In connection with the Chapter 11 filing, the Debtor has proposed a debtor-in-possession ("DIP") credit facility in the aggregate amount of $275 million with Ridgeline National Bank, N.A. serving as DIP Agent. The DIP facility consists of $150 million in new money commitments and a $125 million roll-up of pre-petition first lien revolving credit facility loans, at an interest rate of Secured Overnight Financing Rate ("SOFR") plus 450 basis points, with a 1.00% SOFR floor. The DIP credit facility is the subject of separate proceedings before this Court.
For context regarding the Debtor's financial condition, the Debtor reported for its fiscal year ending January 31, 2025 total revenues of approximately $1.87 billion, a net loss of approximately $214 million, and negative EBITDA of approximately $42 million. These results reflect the significant financial deterioration that ultimately led to the Debtor's Chapter 11 filing. The Debtor's estimated total unsecured claims pool is between approximately $180 million and $220 million, inclusive of trade payables, the unsecured notes, rejection damages, and other unsecured obligations.
C. Meridian Consumer Brands LLC
Meridian Consumer Brands LLC is a Delaware limited liability company with its principal offices located at 575 Lexington Avenue, 22nd Floor, New York, New York 10022 (EIN: 83-2947156). Meridian is a leading developer, manufacturer, and distributor of a diversified portfolio of branded household cleaning products, personal care items, and small kitchen appliances. Meridian's products are sold through major national retailers, regional chains, club stores, and e-commerce channels throughout the United States.
Meridian is a portfolio company of Briarstone Capital Partners Fund IV, LP, a private equity fund managed by Briarstone Capital Partners. Briarstone acquired approximately 78% of Meridian's equity interest in 2021 in a transaction valued at approximately $680 million. The remaining equity is held by Meridian's management team and certain co-investors.
For its fiscal year ending December 31, 2024, Meridian reported total revenues of approximately $1.24 billion and earnings before interest, taxes, depreciation, and amortization ("EBITDA") of approximately $167 million. Meridian is a substantial enterprise with a diversified customer base, though the loss of a major customer such as the Debtor — and the potential impairment of a significant receivable — represents a material financial impact.
The Debtor has historically been one of Meridian's top-five retail customers, ranked as Meridian's fourth-largest customer by revenue. For Meridian's fiscal year ending December 31, 2024, the Debtor accounted for approximately $58.3 million in purchases of Meridian's branded consumer products, representing approximately 4.7% of Meridian's total revenues for that period.
D. Meridian's Trade Relationship with the Debtor
Meridian supplied branded consumer products to the Debtor for resale through the Debtor's 347 retail stores and e-commerce platform pursuant to a well-established trade relationship spanning over eight years. The products supplied included branded household cleaning products (all-purpose cleaners, specialty surface cleaners, and laundry care products), personal care items (hand soaps, lotions, and grooming products), and small kitchen appliances (countertop blenders, coffee makers, and food processors). These products were among the Debtor's core merchandise categories and were prominent in the Debtor's in-store displays and online product assortments.
The parties transacted on standard trade terms of Net 60, with an early payment discount of 2% available to the Debtor if payment was remitted within fifteen (15) days of the invoice date (i.e., 2/15 Net 60). The Debtor issued purchase orders to Meridian, which Meridian accepted and fulfilled by shipping goods from its distribution warehouses to the Debtor's distribution centers and, in certain instances, directly to specific retail store locations. Meridian invoiced the Debtor upon shipment, and the Debtor was obligated to remit payment within sixty days of the invoice date.
As of the Petition Date, Meridian holds approximately $14,726,418.37 in outstanding pre-petition trade receivables from the Debtor, comprised of eighty-three (83) unpaid invoices dated between July 18, 2025 (Invoice No. MCB-092174, in the amount of $212,600.00) and October 10, 2025 (Invoice No. MCB-095301, in the amount of $187,440.50). None of these invoices have been paid, in whole or in part.
Of this total, approximately $3,218,650.00 in goods were shipped within the forty-five (45)-day reclamation window preceding the Petition Date — that is, goods shipped between August 30, 2025 and October 14, 2025. Meridian timely asserted its reclamation rights under 11 U.S.C. § 546(c) with respect to these goods by written demand letter to the Debtor dated October 16, 2025, delivered within the statutory time period following the Petition Date.
The subset of goods that is the specific subject of this Motion — goods with an aggregate invoice value of $1,847,200.00 — represents those goods that were not merely shipped but were actually received by the Debtor in the ordinary course of business within the twenty (20)-day period immediately preceding the Petition Date (i.e., September 24, 2025 through October 14, 2025). These are the goods that qualify for administrative expense priority under Section 503(b)(9) of the Bankruptcy Code.
IV. THE § 503(b)(9) CLAIM
A. Statutory Framework
Section 503(b)(9) of the Bankruptcy Code provides, in pertinent part:
"After notice and a hearing, there shall be allowed administrative expenses . . . including . . . 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."
11 U.S.C. § 503(b)(9) (emphasis added).
Administrative expense claims allowed under Section 503(b)(9) are entitled to priority under 11 U.S.C. § 507(a)(2), which provides that second priority is accorded to "administrative expenses allowed under section 503(b) of this title." As claims entitled to administrative expense priority under Section 507(a)(2), Section 503(b)(9) claims must be paid in full under any plan of reorganization pursuant to 11 U.S.C. § 1129(a)(9)(A), which requires that each holder of a claim of a kind specified in Section 507(a)(2) receive, on the effective date of the plan, cash equal to the allowed amount of such claim, unless the holder agrees to different treatment.
Section 503(b)(9) was added to the Bankruptcy Code by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 ("BAPCPA"), Pub. L. No. 109-8, § 1227, 119 Stat. 23, 200 (2005). Congress enacted Section 503(b)(9) to provide sellers of goods with enhanced protections in the bankruptcy context — specifically, to ensure that sellers who delivered goods to a debtor on the eve of bankruptcy are not relegated to the status of general unsecured creditors with respect to the value of those recently delivered goods. The provision reflects Congress's recognition that goods delivered in the "twilight period" immediately preceding a bankruptcy filing are, in economic substance, similar to post-petition deliveries and should receive administrative priority treatment.
To establish entitlement to an administrative expense claim under Section 503(b)(9), a claimant must demonstrate three elements: (1) the claimant sold "goods" to the debtor; (2) the goods were "received" by the debtor within twenty (20) days before the petition date; and (3) the goods were sold in the "ordinary course" of the debtor's business. As set forth below, Meridian's claim satisfies each of these statutory elements.
B. Meridian's Claim Satisfies Each Element of § 503(b)(9)
1. Meridian Sold "Goods" to the Debtor. The first element of a Section 503(b)(9) claim requires that the claimant have sold "goods" to the debtor. The term "goods" is not defined in the Bankruptcy Code, and courts have generally looked to Article 2 of the Uniform Commercial Code ("UCC") for guidance. Under UCC § 2-105(1), "goods" are defined as "all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale." Courts have consistently interpreted "goods" under Section 503(b)(9) in accordance with this definition to encompass tangible, movable personal property.
Here, Meridian sold tangible, movable consumer products — specifically branded household cleaning products, personal care items, and small kitchen appliances — to the Debtor for resale in the Debtor's retail stores and through its e-commerce platform. These products are unquestionably "goods" within the meaning of Section 503(b)(9) and Article 2 of the Uniform Commercial Code. They are tangible, movable items of personal property that were identified to specific purchase order contracts at the time of shipment.
Each shipment of goods was made pursuant to purchase orders issued by the Debtor and accepted by Meridian in the ordinary course of their commercial relationship. Each item was invoiced by Meridian under its standard trade terms, and the goods were delivered in their finished, saleable form for resale by the Debtor to its end customers.
2. The Goods Were "Received" by the Debtor Within 20 Days Before the Petition Date. The second element of a Section 503(b)(9) claim requires that the goods were "received" by the debtor within twenty days before the date of commencement of the bankruptcy case. The Petition Date in this case is October 14, 2025. Counting backward twenty days from the Petition Date, the statutory look-back period runs from September 24, 2025 through October 14, 2025.
The goods that are the subject of this Motion were physically delivered to and accepted by the Debtor at its distribution centers and retail store locations within this twenty-day window. Meridian maintains detailed shipping records, bills of lading, delivery receipts, and warehouse receiving confirmations that document the date on which each shipment was actually received by the Debtor. These records confirm that the Debtor received goods with an aggregate invoice value of $1,847,200.00 during the period from September 24, 2025 through October 14, 2025.
The concept of "received" under Section 503(b)(9) refers to actual physical receipt by the debtor — that is, the date on which the goods were physically delivered to and accepted by the debtor, not the date of shipment, the date of the invoice, or the date on which title may have transferred under the applicable sales contract. See In re Momenta, Inc., 455 B.R. 353, 370 (Bankr. D.N.H. 2011) (holding that "received" means actual physical receipt); In re World Imports, Ltd., 2007 WL 4440818, at *3 (Bankr. C.D. Cal. Dec. 13, 2007) (same). Meridian can document actual physical receipt by the Debtor for each shipment within the twenty-day window.
A detailed schedule of qualifying invoices and shipments, with corresponding ship dates, delivery/receipt dates, delivery locations, and invoice amounts, is attached as Exhibit B to this Motion. The accuracy and completeness of Exhibit B is supported by the Hargrove Declaration, attached as Exhibit A.
3. The Goods Were Sold in the "Ordinary Course" of the Debtor's Business. The third and final element of a Section 503(b)(9) claim requires that the goods were sold to the debtor in the "ordinary course of such debtor's business." The statutory language focuses on the ordinary course of the debtor's business — that is, whether the purchase of the goods in question was a transaction that the debtor would engage in as part of its normal business operations.
The Debtor is a national home goods and lifestyle retailer. The purchase of consumer products from brand manufacturers and distributors such as Meridian for resale through the Debtor's retail stores and e-commerce platform is squarely within the core of the Debtor's business operations. Indeed, the acquisition of branded merchandise for resale is the very essence of the Debtor's business. There is no serious question that the Debtor's purchase of household cleaning products, personal care items, and small kitchen appliances from Meridian for resale to end consumers falls within the ordinary course of the Debtor's business.
Moreover, Meridian and the Debtor maintained a longstanding supply relationship spanning more than eight years. The Debtor was Meridian's fourth-largest customer by revenue, with fiscal year 2024 purchases of approximately $58.3 million. The goods shipped during the twenty-day window were of the same type, in comparable volumes, and on the same trade terms as prior shipments, consistent with the parties' established course of dealing. Specifically, the trade terms were Net 60 with a 2% early payment discount at Net 15 — the same terms that had governed the parties' transactions throughout their commercial relationship.
There were no unusual or irregular aspects to the transactions at issue that would take them outside the ordinary course of business. The purchase orders were submitted by the Debtor through its standard procurement system. The goods were shipped from Meridian's warehouses through normal logistics channels. The quantities ordered and shipped were consistent with historical purchasing patterns. No special or extraordinary terms were negotiated for any of these shipments. In all respects, these were routine, arm's-length commercial transactions between two established trading partners.
C. Calculation of the § 503(b)(9) Claim Amount
The total value of qualifying goods received by the Debtor between September 24, 2025 and October 14, 2025 is $1,847,200.00. This amount is based on the invoice prices for the goods received, which reflect the agreed-upon contract prices between the parties, negotiated at arm's length in the ordinary course of their longstanding commercial relationship.
The qualifying invoices are identified on the Schedule of Qualifying Invoices attached as Exhibit B. Each line item on the schedule sets forth the following information: the Meridian invoice number, the invoice date, a description of the goods, the ship date, the date on which the goods were received by the Debtor, the delivery location (distribution center or retail store), and the invoice amount. The invoice numbers fall within the MCB-09XXXX series, consistent with Meridian's sequential invoice numbering system.
No payments have been received from the Debtor on any of the invoices covering the qualifying goods. No setoffs, credits, returns, or other adjustments have been applied to reduce these amounts. The full invoice amount of $1,847,200.00 remains outstanding and unpaid.
For context, the $1,847,200.00 in Section 503(b)(9) qualifying goods is a subset of the total $3,218,650.00 in goods shipped by Meridian to the Debtor within the forty-five (45)-day reclamation window (August 30, 2025 through October 14, 2025), and a subset of Meridian's total pre-petition trade receivable claim of $14,726,418.37. The relationship among these figures is summarized as follows:
V. LEGAL ARGUMENT
A. Section 503(b)(9) Provides an Unqualified Statutory Right to Administrative Expense Priority
The language of Section 503(b)(9) is mandatory: the value of goods meeting the statutory criteria "shall be allowed" as administrative expenses. 11 U.S.C. § 503(b)(9) (emphasis added). The use of the word "shall" imposes a mandatory duty on the court to allow the claim as an administrative expense once the three statutory elements — goods, receipt within twenty days, and ordinary course — are satisfied. There is no discretion to deny an otherwise qualifying claim, and there is no balancing test or equitable inquiry.
Critically, unlike administrative expense claims under Section 503(b)(1)(A) — which require the claimant to demonstrate that the expense was an "actual, necessary" cost and expense of preserving the estate — Section 503(b)(9) contains no requirement that the claimant demonstrate that the claim provides a "benefit" to the bankruptcy estate. Section 503(b)(9) is a standalone statutory entitlement that operates independently of the traditional benefit-to-the-estate analysis. Congress made a deliberate policy choice to confer administrative priority on goods sellers who delivered goods to a debtor in the twilight period, without requiring those sellers to prove that the goods enhanced the estate's value or were necessary to the debtor's reorganization.
Courts in this District and throughout the country have consistently held that Section 503(b)(9) establishes an independent right to administrative expense treatment that does not require proof of benefit to the estate. See, e.g., In re Plastech Engineered Products, Inc., 394 B.R. 147, 160 (Bankr. E.D. Mich. 2008) (holding that "§ 503(b)(9) does not incorporate the other requirements of § 503(b)(1)(A)" and that "there is no requirement that the goods benefit the estate"); In re Circuit City Stores, Inc., 2010 WL 4956022, at 3 (Bankr. E.D. Va. Dec. 1, 2010) (same); In re Goody's Family Clothing, Inc., 401 B.R. 131, 141-42 (Bankr. D. Del. 2009) (granting § 503(b)(9) claims where statutory elements were met without requiring a showing of benefit to the estate). The Delaware bankruptcy courts have been particularly clear on this point, consistently treating Section 503(b)(9) as a straightforward statutory entitlement for sellers who can demonstrate that goods were received by the debtor within the twenty-day look-back period. See also In re Pilgrim's Pride Corp.*, 421 B.R. 231, 237 (Bankr. N.D. Tex. 2009) ("Section 503(b)(9) creates a new and independent basis for granting a seller an administrative expense.").
Here, Meridian has demonstrated that it sold goods to the Debtor, that the goods were received by the Debtor within twenty days before the Petition Date, and that the goods were sold in the ordinary course of the Debtor's business. Having satisfied each element of the statute, Meridian is entitled, as a matter of law, to allowance of its $1,847,200.00 claim as an administrative expense.
B. The "Value" of the Goods Should Be Measured by the Contract/Invoice Price
Section 503(b)(9) provides for the allowance of "the value of any goods received" by the debtor. 11 U.S.C. § 503(b)(9). Courts have addressed the question of how "value" should be measured in this context and have generally concluded that the invoice or contract price agreed upon by the parties is the appropriate measure of value, absent evidence of fraud, overreaching, or other circumstances that would render the contract price unreliable.
The rationale for using the contract price is straightforward: the invoice price represents the consideration that the debtor agreed to pay for the goods in a transaction negotiated at arm's length between willing parties. It reflects the mutual agreement of the buyer and seller as to the value of the goods, and it provides a clear, readily ascertainable measure of value that promotes efficiency and reduces the costs of administration. See In re Ernie Haire Ford, Inc., 403 B.R. 750, 757 (Bankr. M.D. Fla. 2009) (holding that "the invoice price of the goods is a reasonable measure of the value of the goods under § 503(b)(9)"); In re Global Home Products, LLC, 369 B.R. 778, 786 (Bankr. D. Del. 2007) (utilizing the contract price as the measure of value under § 503(b)(9)).
Here, the invoice prices for the qualifying goods total $1,847,200.00 and were set at arm's length between two sophisticated commercial parties in the ordinary course of their longstanding trade relationship. There is no allegation or evidence of fraud, overreaching, or any other basis to deviate from the contract price. The goods were sold on the same trade terms (Net 60, 2/15) and at the same pricing as prior shipments in the ordinary course. Accordingly, the invoice price of $1,847,200.00 represents the appropriate measure of "value" for purposes of Meridian's Section 503(b)(9) claim.
C. Relationship Between § 503(b)(9) and § 546(c) Reclamation
As noted above, Meridian has separately asserted its reclamation rights under 11 U.S.C. § 546(c) with respect to $3,218,650.00 in goods shipped within the forty-five (45)-day pre-petition window (August 30, 2025 through October 14, 2025). A written reclamation demand was timely sent to the Debtor on October 16, 2025. The Section 503(b)(9) administrative expense claim and the Section 546(c) reclamation demand are complementary but distinct remedies available to a seller of goods in bankruptcy.
Section 546(c) of the Bankruptcy Code preserves a seller's right under applicable non-bankruptcy law (including UCC § 2-702) to reclaim goods sold to an insolvent debtor, subject to certain statutory requirements and limitations. Section 546(c)(2) further provides that if the court denies a seller's reclamation claim, the court "may grant" the seller an administrative expense claim under Section 503(b) or a lien to secure the seller's claim.
However, Section 503(b)(9) is an independent statutory right that is not contingent on the success or failure of a reclamation demand under Section 546(c). A seller's entitlement to administrative priority under Section 503(b)(9) arises by operation of the statute itself, based solely on whether the three statutory elements are satisfied — irrespective of whether the seller has asserted reclamation rights, and irrespective of whether a reclamation demand is ultimately granted or denied. See In re Plastech, 394 B.R. at 160-61 ("Section 503(b)(9) provides an independent right to an administrative expense claim and is not dependent upon, or limited by, the reclamation provisions of § 546(c)."); In re Dana Corp., 367 B.R. 1, 9 (Bankr. S.D.N.Y. 2007) (holding that § 503(b)(9) and § 546(c) are "separate and distinct remedies"). Meridian is entitled to administrative priority for the $1,847,200.00 in qualifying goods regardless of the disposition of its reclamation claim.
To the extent the $1,847,200.00 in Section 503(b)(9) goods overlaps with the $3,218,650.00 in reclamation goods — as the twenty-day Section 503(b)(9) window falls entirely within the forty-five-day reclamation window — Meridian does not seek double recovery. The total reclamation claim of $3,218,650.00 includes the $1,847,200.00 in Section 503(b)(9) qualifying goods. To the extent Meridian receives payment of its Section 503(b)(9) administrative claim, that amount would be credited against any recovery Meridian might otherwise be entitled to receive on its overlapping reclamation claim, such that Meridian would not receive more than the total value of the goods at issue.
D. The Critical Vendor Motion Does Not Moot This Request
The Debtor filed a motion on October 16, 2025, seeking authority to pay certain pre-petition claims of critical vendors in order to ensure the continued supply of essential goods and services during the Chapter 11 case (the "Critical Vendor Motion"). In the Critical Vendor Motion, the Debtor designated Meridian as a critical vendor and proposed payment of up to $2,500,000.00 of Meridian's pre-petition claims in exchange for Meridian's agreement to continue supplying goods to the Debtor on customary trade terms during the pendency of the Chapter 11 case.
Even if Meridian receives the proposed $2,500,000.00 critical vendor payment, this does not and should not moot or reduce the Section 503(b)(9) administrative expense claim that is the subject of this Motion. The Section 503(b)(9) claim is entitled to administrative expense priority as a matter of law and must be paid in full on or before the effective date of any plan of reorganization under Section 1129(a)(9)(A) of the Bankruptcy Code. The critical vendor payment and the Section 503(b)(9) administrative claim address different portions of Meridian's pre-petition claim and serve fundamentally different purposes.
The critical vendor payment addresses a subset of Meridian's broader pre-petition unsecured claim and serves a practical purpose — ensuring the continued supply of Meridian's branded products to the Debtor's retail stores during the pendency of the bankruptcy case, thereby preserving the Debtor's going-concern value for the benefit of all stakeholders. The Section 503(b)(9) administrative claim, by contrast, reflects a statutory entitlement — Congress's determination that sellers of goods who delivered products to a debtor in the twilight period immediately before bankruptcy should receive priority treatment, regardless of whether those sellers continue to do business with the debtor post-petition.
Meridian's total pre-petition claim is $14,726,418.37, of which $1,847,200.00 is entitled to administrative expense priority under Section 503(b)(9) and the remaining approximately $12,879,218.37 constitutes a general unsecured claim (subject to any reclamation recovery). Any critical vendor payment should properly be applied to the general unsecured portion of Meridian's claim — not to the Section 503(b)(9) administrative portion, which is entitled to priority treatment and full payment as a matter of statutory right. See In re Beverage & More, Inc., 576 B.R. 450, 461 (Bankr. N.D. Cal. 2017) (holding that critical vendor payments should not be credited against § 503(b)(9) claims because they address different legal interests).
VI. REQUEST FOR RELIEF
WHEREFORE, Meridian Consumer Brands LLC respectfully requests that this Court enter an order, substantially in the form of the Proposed Order attached hereto as Exhibit C:
1. Allowing Meridian Consumer Brands LLC an administrative expense claim in the amount of $1,847,200.00 pursuant to 11 U.S.C. § 503(b)(9);
2. Directing the Debtor to pay such administrative expense claim in full at such time as is determined by the Court or upon the effective date of any plan of reorganization confirmed in this case, or in connection with any sale of substantially all of the Debtor's assets pursuant to 11 U.S.C. § 363, or at such earlier time as the Court may direct;
3. Reserving all of Meridian's other rights, claims, and remedies, including but not limited to: (a) its general unsecured claim for the balance of its $14,726,418.37 in pre-petition trade receivables; (b) its reclamation demand under 11 U.S.C. § 546(c) for $3,218,650.00 in goods shipped within the forty-five-day pre-petition window; (c) any administrative expense claims arising from post-petition transactions with the Debtor; and (d) any and all other claims, defenses, rights, and remedies available under applicable law; and
4. Granting such other and further relief as the Court deems just and proper.
VII. NOTICE
Notice of this Motion has been provided to the following parties:
(a) Cascadia Home & Lifestyle Inc., 1200 NW Everett Street, Suite 800, Portland, OR 97209, Attn: Vikram Patel, Chief Financial Officer;
(b) Brindoval Baines & Lord LLP (counsel to the Debtor), 51 West 52nd Street, New York, NY 10019, Attn: Harrison Caldwell, Esq.;
(c) Borwick Sato LLP (Delaware co-counsel to the Debtor), 919 N. Market Street, Suite 600, Wilmington, DE 19801, Attn: Michael Donnelly, Esq.;
(d) The Office of the United States Trustee for Region 3, J. Caleb Boggs Federal Building, 844 King Street, Suite 2207, Wilmington, DE 19801;
(e) Garvey & Holbrook LLP (counsel to the Official Committee of Unsecured Creditors), 750 Third Avenue, 30th Floor, New York, NY 10017, Attn: Diana Prescott, Esq.;
(f) Ridgeline National Bank, N.A. (DIP Agent and Pre-Petition First Lien Administrative Agent), 600 Travis Street, Houston, TX 77002, Attn: Laura Chin;
(g) Thornfield Capital Management LP (Pre-Petition Second Lien Agent), 9 West 57th Street, 34th Floor, New York, NY 10019, Attn: Alan Reeves;
(h) Pacific Continental Trust Company (Indenture Trustee for the 8.75% Senior Unsecured Notes due 2027), 101 Barclay Street, 7th Floor, New York, NY 10286; and
(i) All parties who have filed notices of appearance and requests for service of papers in this case.
Meridian submits that no other or further notice of this Motion is necessary or required under the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, or the Local Rules of this Court.
VIII. CONCLUSION
For the foregoing reasons, Meridian Consumer Brands LLC respectfully requests that this Court grant this Motion in its entirety and enter the Proposed Order attached hereto as Exhibit C.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
CALDERWOOD & HARKNESS LLP
By: ________
Colette Whitman (Del. Bar No. 5274) Nathaniel Bower (Del. Bar No. 5891) Nathan Ikeda (Del. Bar No. 6412) Gabrielle Moss (Del. Bar No. 6708) 1105 N. Market Street, Suite 1400 Wilmington, DE 19801 Telephone: (302) 555-4800 Facsimile: (302) 555-4801
Email: cwhitman@calderwoodharkness.com
Email: nbower@calderwoodharkness.com
Email: nikeda@calderwoodharkness.com
Email: gmoss@calderwoodharkness.com
-and-
200 Park Avenue, 38th Floor New York, NY 10166 Telephone: (212) 555-7200 Facsimile: (212) 555-7201
Counsel to Meridian Consumer Brands LLC
Dated: November 4, 2025
Matter No. 1011-00002
EXHIBIT A
DECLARATION OF DOUGLAS HARGROVE IN SUPPORT OF MOTION OF MERIDIAN CONSUMER BRANDS LLC FOR ALLOWANCE AND PAYMENT OF ADMINISTRATIVE EXPENSE CLAIM PURSUANT TO 11 U.S.C. § 503(b)(9)
UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE
In re:
CASCADIA HOME & LIFESTYLE INC.,
a Delaware corporation, EIN: 47-6138290,
Debtor.
Case No. 25-12087 (CMA)
Chapter 11
DECLARATION OF DOUGLAS HARGROVE
I, Douglas Hargrove, hereby declare and state as follows under penalty of perjury pursuant to 28 U.S.C. § 1746:
1. I am over the age of 18 and competent to make this declaration. I am the Vice President of Finance of Meridian Consumer Brands LLC ("Meridian" or "MCB"), a Delaware limited liability company with its principal offices located at 575 Lexington Avenue, 22nd Floor, New York, New York 10022. I have held this position since March 2021. I submit this declaration in support of the Motion of Meridian Consumer Brands LLC for Allowance and Payment of Administrative Expense Claim Pursuant to 11 U.S.C. § 503(b)(9) (the "Motion") filed in the above-captioned Chapter 11 case.
2. In my capacity as Vice President of Finance, I am responsible for the oversight and management of Meridian's financial reporting, accounts receivable, credit management, and treasury functions. I have personal knowledge of the facts set forth in this declaration, including the trade relationship between Meridian and Cascadia Home & Lifestyle Inc. ("Cascadia" or the "Debtor"), the invoices at issue, and the shipment and delivery records pertaining to the goods that are the subject of the Motion. Where I state matters based on my review of Meridian's business records, I have reviewed such records and am satisfied that they are accurate, complete, and maintained in the ordinary course of Meridian's business. If called to testify, I could and would testify competently to the matters set forth herein.
The Trade Relationship
3. Meridian has supplied branded consumer products to Cascadia for resale in Cascadia's retail stores and through its e-commerce platform for approximately eight years. The products supplied by Meridian to Cascadia include branded household cleaning products (including all-purpose cleaners, specialty surface cleaners, and laundry care products), personal care items (including hand soaps, lotions, and grooming products), and small kitchen appliances (including countertop blenders, coffee makers, and food processors). These products have been a staple of Cascadia's merchandise assortment throughout the parties' commercial relationship.
4. Cascadia has been one of Meridian's most significant retail customers. For Meridian's fiscal year ending December 31, 2024, Cascadia was ranked as Meridian's fourth-largest customer by revenue, with total purchases of approximately $58.3 million, representing approximately 4.7% of Meridian's total revenues for the period.
5. The parties transacted business on standard trade terms of Net 60, meaning that Cascadia was obligated to pay each invoice within sixty (60) days of the invoice date. Meridian also offered a 2% early payment discount if payment was remitted within fifteen (15) days of the invoice date (commonly referred to as "2/15 Net 60" terms). These trade terms were consistent throughout the parties' relationship and were not modified or amended in connection with the shipments at issue in the Motion.
6. The typical course of dealing between the parties was as follows: Cascadia would issue purchase orders to Meridian through its procurement system, specifying the products, quantities, and delivery locations. Meridian would accept the purchase orders and fulfill them by shipping goods from Meridian's distribution warehouses, located in New Jersey and California, to Cascadia's distribution centers or, in certain cases, directly to specific Cascadia retail store locations. Meridian would generate an invoice upon shipment of each order, and the invoice would be transmitted to Cascadia electronically.
Pre-Petition Receivables
7. As of the Petition Date of October 14, 2025, Meridian holds $14,726,418.37 in outstanding pre-petition trade receivables from Cascadia, comprised of eighty-three (83) unpaid invoices. The oldest outstanding invoice is Invoice No. MCB-092174, dated July 18, 2025, in the amount of $212,600.00. The most recent outstanding invoice is Invoice No. MCB-095301, dated October 10, 2025, in the amount of $187,440.50. No payment has been received from Cascadia on any of these eighty-three invoices.
8. Meridian filed a proof of claim in this case asserting the total pre-petition trade receivable of $14,726,418.37. This declaration and the Motion do not waive or modify any portion of that claim.
Identification of Section 503(b)(9) Qualifying Goods
9. I have reviewed Meridian's shipping records, bills of lading, delivery confirmations, and warehouse receiving records in order to identify those goods that were actually received by Cascadia within the twenty (20)-day period immediately preceding the Petition Date — that is, the period from September 24, 2025 through October 14, 2025, inclusive.
10. Based on my review, Meridian shipped and Cascadia received goods with an aggregate invoice value of $1,847,200.00 during this twenty-day period. These goods consisted of the same types of branded consumer products that Meridian has historically supplied to Cascadia in the ordinary course — household cleaning products, personal care items, and small kitchen appliances.
11. There was nothing unusual, irregular, or out of the ordinary about these shipments. Each shipment was made pursuant to purchase orders issued by Cascadia through its standard procurement system. The goods were shipped from Meridian's distribution warehouses through normal logistics channels and delivered to Cascadia's distribution centers and retail locations. The quantities ordered, the types of goods shipped, the pricing, and the trade terms were all consistent with the parties' historical course of dealing. No special pricing, extended terms, or other extraordinary conditions were associated with any of these shipments.
12. For each shipment of qualifying goods, I have confirmed, based on Meridian's records, the date on which the goods were physically delivered to and accepted by Cascadia. In all cases, the delivery/receipt date falls within the period from September 24, 2025 through October 14, 2025. The specific invoice numbers, invoice dates, descriptions of goods, ship dates, delivery/receipt dates, delivery locations, and invoice amounts for each qualifying shipment are set forth on the Schedule of Qualifying Invoices and Shipments attached to the Motion as Exhibit B, which I have reviewed and which is accurate and complete.
Reclamation Goods
13. Additionally, within the forty-five (45)-day reclamation window preceding the Petition Date — that is, the period from August 30, 2025 through October 14, 2025 — Meridian shipped approximately $3,218,650.00 in goods at invoice value to Cascadia. The $1,847,200.00 in Section 503(b)(9) qualifying goods is a subset of the $3,218,650.00 in reclamation goods; all of the goods received within the twenty-day window were also, by definition, shipped within the forty-five-day window.
14. Meridian sent a written reclamation demand to Cascadia on October 16, 2025, within the time period prescribed by Section 546(c) of the Bankruptcy Code, asserting Meridian's rights to reclaim the $3,218,650.00 in goods shipped during the reclamation period. That reclamation demand is the subject of separate proceedings and is not the subject of the instant Motion.
No Payment Received
15. Meridian has not received any payment from Cascadia on any of the eighty-three (83) outstanding pre-petition invoices, including all of the invoices covering the Section 503(b)(9) qualifying goods. No setoff, credit, return, or other adjustment has been applied to reduce the amounts owed. The full amount of $1,847,200.00 attributable to the qualifying goods remains outstanding and unpaid.
16. I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct.
Executed on November 4, 2025 New York, New York
________________________________________
Douglas Hargrove Vice President of Finance Meridian Consumer Brands LLC 575 Lexington Avenue, 22nd Floor New York, NY 10022
EXHIBIT B
SCHEDULE OF QUALIFYING INVOICES AND SHIPMENTS (§ 503(b)(9))
Schedule of Goods Received by Cascadia Home & Lifestyle Inc. Within 20 Days Before the Petition Date (September 24, 2025 – October 14, 2025)
Claimant: Meridian Consumer Brands LLC Case: In re Cascadia Home & Lifestyle Inc., Case No. 25-12087 (Bankr. D. Del.)
Summary:
Note: This schedule is a subset of the total pre-petition trade receivables of $14,726,418.37 (83 invoices) owed by the Debtor to Meridian Consumer Brands LLC and a subset of the $3,218,650.00 in goods shipped within the 45-day reclamation window (August 30, 2025 through October 14, 2025). All delivery dates have been verified against Meridian's shipping records, bills of lading, delivery confirmations, and warehouse receiving records as set forth in the Declaration of Douglas Hargrove (Exhibit A). Each delivery/receipt date falls within the 20-day period immediately preceding the Petition Date (September 24, 2025 through October 14, 2025).
EXHIBIT C
PROPOSED ORDER
UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE
In re:
CASCADIA HOME & LIFESTYLE INC.,
a Delaware corporation, EIN: 47-6138290,
Debtor.
Case No. 25-12087 (CMA)
Chapter 11
ORDER GRANTING MOTION OF MERIDIAN CONSUMER BRANDS LLC FOR ALLOWANCE OF ADMINISTRATIVE EXPENSE CLAIM PURSUANT TO 11 U.S.C. § 503(b)(9)
Upon the Motion of Meridian Consumer Brands LLC ("Meridian"), filed on November 4, 2025 (Dkt. No. __) (the "Motion"), seeking entry of an order allowing and directing payment of an administrative expense claim in the amount of $1,847,200.00 pursuant to 11 U.S.C. § 503(b)(9); and the Court having reviewed and considered the Motion, the Declaration of Douglas Hargrove, Vice President of Finance of Meridian Consumer Brands LLC (Exhibit A to the Motion), and the Schedule of Qualifying Invoices and Shipments (Exhibit B to the Motion); and the Court having reviewed the record in this case and any responses, objections, or other pleadings filed in connection with the Motion; and due and sufficient notice of the Motion having been provided to all parties entitled to notice under the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, and the Local Rules of this Court; and the Court having determined that no further or other notice is necessary or required; and the Court having considered the arguments of counsel, if any, and the evidence submitted in support of the Motion; and the Court finding that the Motion should be granted for the reasons stated on the record and/or in the Motion; and after due deliberation and good cause appearing therefor, it is hereby:
ORDERED that the Motion is GRANTED; and it is further
ORDERED that Meridian Consumer Brands LLC is hereby allowed an administrative expense claim in the amount of $1,847,200.00 pursuant to 11 U.S.C. § 503(b)(9), representing the value of goods received by the Debtor in the ordinary course of the Debtor's business within twenty (20) days before the Petition Date; and it is further
ORDERED that the Debtor shall pay such administrative expense claim in full to Meridian Consumer Brands LLC at such time as determined by further order of this Court, or on or before the effective date of any plan of reorganization confirmed in this case pursuant to 11 U.S.C. § 1129(a)(9)(A), or in connection with the closing of any sale of substantially all of the Debtor's assets pursuant to 11 U.S.C. § 363, or at such earlier time as this Court may direct; and it is further
ORDERED that the allowance of this administrative expense claim is without prejudice to any other claims, rights, or remedies of Meridian Consumer Brands LLC in this case, including but not limited to: (a) Meridian's general unsecured claim for the balance of its pre-petition trade receivables; (b) Meridian's reclamation demand under 11 U.S.C. § 546(c); (c) any administrative expense claims arising from post-petition transactions between Meridian and the Debtor; and (d) any and all other claims, defenses, rights, and remedies available to Meridian under applicable law; and it is further
ORDERED that this Court retains jurisdiction with respect to all matters arising from or related to the interpretation, implementation, and enforcement of this Order.
Dated: ____, 2025 Wilmington, Delaware
________________________________________
THE HONORABLE CHRISTINE M. ALDRIDGE UNITED STATES BANKRUPTCY JUDGE
CERTIFICATE OF SERVICE
I, Nathan Ikeda, hereby certify that on November 4, 2025, I caused a true and correct copy of the foregoing Motion of Meridian Consumer Brands LLC for Allowance and Payment of Administrative Expense Claim Pursuant to 11 U.S.C. § 503(b)(9), together with all exhibits attached thereto (including Exhibit A — Declaration of Douglas Hargrove, Exhibit B — Schedule of Qualifying Invoices and Shipments, and Exhibit C — Proposed Order), to be served upon the following parties by electronic transmission through the Court's CM/ECF electronic filing system (for those parties registered to receive electronic notification) and/or by first-class mail, postage prepaid:
1. Cascadia Home & Lifestyle Inc., 1200 NW Everett Street, Suite 800, Portland, OR 97209, Attn: Vikram Patel, Chief Financial Officer
2. Brindoval Baines & Lord LLP (counsel to the Debtor), 51 West 52nd Street, New York, NY 10019, Attn: Harrison Caldwell, Esq.
3. Borwick Sato LLP (Delaware co-counsel to the Debtor), 919 N. Market Street, Suite 600, Wilmington, DE 19801, Attn: Michael Donnelly, Esq.
4. Office of the United States Trustee for Region 3, J. Caleb Boggs Federal Building, 844 King Street, Suite 2207, Wilmington, DE 19801
5. Garvey & Holbrook LLP (counsel to the Official Committee of Unsecured Creditors), 750 Third Avenue, 30th Floor, New York, NY 10017, Attn: Diana Prescott, Esq.
6. Ridgeline National Bank, N.A. (DIP Agent and Pre-Petition First Lien Administrative Agent), 600 Travis Street, Houston, TX 77002, Attn: Laura Chin
7. Thornfield Capital Management LP (Pre-Petition Second Lien Agent), 9 West 57th Street, 34th Floor, New York, NY 10019, Attn: Alan Reeves
8. Pacific Continental Trust Company (Indenture Trustee for the 8.75% Senior Unsecured Notes due 2027), 101 Barclay Street, 7th Floor, New York, NY 10286
9. Kellner & Associates LLC (Chief Restructuring Officer), 300 S. Wacker Drive, Suite 2200, Chicago, IL 60606, Attn: Philip Kellner
10. Ashworth Partners LLC (Financial Advisor and Investment Banker to the Debtor), 399 Park Avenue, 12th Floor, New York, NY 10022, Attn: Sandra Ng
11. All parties who have filed notices of appearance and requests for service of papers in this case
CALDERWOOD & HARKNESS LLP
By: ________
Nathan Ikeda (Del. Bar No. 6412) 1105 N. Market Street, Suite 1400 Wilmington, DE 19801 Telephone: (302) 555-4800 Facsimile: (302) 555-4801
Email: nikeda@calderwoodharkness.com