International Emergency Economic Powers Act Tariff Refund Claims: Key Considerations for Lenders, Borrowers, and Claims Purchasers

The U.S. Supreme Court’s decision in Learning Resources, Inc. v. Trump¹ holding that the International Emergency Economic Powers Act (IEEPA) does not authorize the imposition of tariffs, affirming the Federal Circuit’s judgment invalidating the IEEPA tariffs in V.O.S. Selections and vacating Learning Resources for lack of jurisdiction, has given rise to what may be a potentially unprecedented customs refund process. Importers of record that paid IEEPA tariffs may have statutory refund claims, including under 19 U.S.C. § 1505(b), which obligates U.S. Customs and Border Protection (CBP) to refund “excess moneys deposited” upon the liquidation or reliquidation of the relevant customs entry, together with interest, within 30 days. Whether and when those claims become payable is subject to Consolidated Administration and Processing of Entries (CAPE) validation, government offsets, exclusions, protest/litigation posture, and any further appellate or stay developments.

This Update addresses the legal framework that lenders, private credit funds, and other market participants should consider when evaluating IEEPA tariff refund claims as collateral, as targets for secondary-market acquisition, or as a source of mandatory prepayment obligations under existing credit agreements. The treatment of tariff refund claims in merger-and-acquisition (M&A) purchase agreements raises its own set of issues, which are addressed in a separate Sidley publication. Much of the analysis below involves questions of first impression, and the landscape is evolving rapidly.

The Refund Process: CIT Litigation and the CAPE System

The procedural framework for IEEPA refunds has been shaped primarily by litigation at the U.S. Court of International Trade (CIT). In the original lead case, Atmus Filtration, Inc. v. United States, Senior Judge Richard Eaton issued a series of orders directing CBP to process refunds. On March 4, 2026, the CIT ordered that “all importers of record” that paid IEEPA-based duties are “entitled to the benefit of” the Learning Resources decision and directed CBP to determine final tariff assessments “without regard to” the IEEPA duties. On March 27, Judge Eaton issued an amended order expanding the directive to cover all entries — including entries for which liquidation had already become final — and ordering CBP to liquidate or reliquidate all such entries without regard to IEEPA duties.

Atmus Filtration was voluntarily dismissed on April 6, 2026. Judge Eaton immediately designated Euro-Notions Florida, Inc. v. U.S. Customs and Border Protection as the new lead case and, on April 7, issued an order mirroring the March 27 Atmus order. The CIT has suspended the order’s requirement of immediate compliance, allowing CBP to proceed with a phased rollout of refunds rather than requiring an immediate lump-sum payment. The government’s deadline to appeal the CIT’s nationwide refund order runs through early June 2026. A successful appeal could result in a stay of the refund process and significantly delay payments. As of March 2026, over 2,500 individual IEEPA tariff cases were pending before the CIT, and that number has likely grown substantially. According to a declaration CBP filed with the CIT on April 28, 2026, importers and brokers had submitted approximately 75,300 CAPE declarations covering more than 11.2 million individual entries as of April 26, 2026, of which approximately 1.74 million entries had cleared all validations.

CBP launched Phase 1 of the CAPE system on April 20, 2026, at 8 a.m. EDT. CAPE is the administrative mechanism through which importers submit claims for electronic ACH refund payment. Refund claims are submitted by uploading a CAPE declaration — a CSV file listing up to 9,999 entries per declaration — through the ACE portal. Phase 1 covers certain unliquidated entries and certain entries that liquidated within the previous 80 days, subject to CBP validation and a number of categorical exclusions — including, among others, reconciliation entries, drawback entries, U.S.–Mexico–Canada Agreement (USMCA) duty-deferral entries, temporary importation under bond (TIB) entries, entries pending antidumping/countervailing duties (AD/CVD) liquidation, and entries on which the surety paid the IEEPA duties. Not every scheduled entry will necessarily be eligible for immediate CAPE processing. CBP has indicated that valid refunds will generally be issued within 60 to 90 days following acceptance of a CAPE declaration unless a compliance concern requires further review; for eligible liquidated entries, CBP has indicated that reliquidation generally will occur on the next business day after CAPE acceptance.

Several procedural features of CAPE are worth noting. A CAPE declaration cannot be amended once filed and accepted; if entries are rejected during validation, the filer must correct the errors and submit those entries on a separate, new declaration. Importantly, CAPE Phase 1 excludes entries that are the subject of pending administrative protests; CBP has indicated that such entries will be routed to Phase 2 (for which no launch date has been announced). Importers seeking faster processing through CAPE may consider withdrawing pending protests — a decision that requires careful coordination between the importer’s customs counsel and any lender with a security interest in the claims. The launch on April 20 was accompanied by technical glitches, including duplicate tax ID errors and submission failures, which CBP has acknowledged and is investigating; on April 29, 2026, CBP published the complete CAPE error code table, and early practitioner reporting indicates a rejection rate of approximately 15% during initial validation. Additionally, effective February 6, 2026, CBP implemented a mandatory electronic refund rule under which all refunds are issued via ACH (subject to limited hardship waivers under 31 CFR Part 208).

Creating and Perfecting Security Interests in Tariff Refund Claims

When does a tariff refund claim become “property”? A threshold question is whether — and when — a tariff refund claim constitutes “property” in which a debtor has sufficient “rights” to support the attachment of a security interest under Uniform Commercial Code (UCC) § 9-203(b)(2). Courts addressing analogous issues in the tax refund context provide useful, though imperfect, guidance. In Segal v. Rochelle,² the Supreme Court held that loss-carryback tax refund claims constitute “property” transferable to the bankruptcy trustee, reasoning that such claims are “sufficiently rooted in the pre-bankruptcy past.” And in In re TOUSA, Inc.,³ the bankruptcy court held that the earliest date on which the debtor could grant a lien on its tax refund was January 1 of the year following the loss, because the refund was based on losses from a tax year that had not yet closed.⁴

By analogy, a tariff refund claim under § 1505(b) may not fully ripen as property until the relevant customs entry is liquidated or reliquidated by CBP. Prior to that event, the claim’s value may be contingent on CBP’s willingness to process the CAPE declaration, the administrative or judicial outcome of any protest, CBP’s determination of the refund amount, and the absence of government offset against other duties owed. To our knowledge, no court has directly addressed whether or when a tariff refund claim becomes “property” for Article 9 purposes; the analogy to tax refund case law, while instructive, is imperfect.

After-acquired property and the bankruptcy risk. Article 9 expressly permits security interests in after-acquired property (UCC § 9-204(a)), so a lender can obtain a valid security agreement and file a UCC-1 financing statement today, with attachment occurring automatically as a property interest arises. The critical caveat is 11 U.S.C. § 552(a): If the borrower files for bankruptcy before the claim ripens, the refund proceeds may be treated as postpetition property, potentially defeating the lender’s after-acquired property interest. Section 552(b) preserves a prepetition security interest in “proceeds, products, offspring, or profits” of prepetition collateral, so if the lender held a prepetition security interest in the underlying imported goods (or in accounts or inventory derived from those goods), there may be an argument that the refund constitutes “proceeds” of that collateral. This argument has not been tested.

Collateral classification. A tariff refund claim arising under § 1505(b) could be classified as a general intangible under UCC § 9-102(a)(42), which functions as a catch-all for personal property that does not fall within the enumerated categories of accounts, instruments, chattel paper, and the like. To the extent the government’s principal obligation is monetary, the claim may more specifically qualify as a payment intangible under § 9-102(a)(61). Perfection of a security interest in general intangibles is achieved by filing a UCC-1 financing statement in the debtor’s jurisdiction (UCC §§ 9-307, 9-310). No possession or control steps are required.

Lenders may also consider the interaction between tariff refund claims and existing credit agreement provisions. In credit agreements that include mandatory prepayment sweep provisions triggered by the receipt of “extraordinary receipts,” the term is typically defined broadly to capture nonrecurring, nonoperating cash receipts such as government payments, condemnation awards, and insurance proceeds. Where such a provision exists, tariff refund proceeds may fall within its scope, making them subject to a mandatory sweep to pay down senior debt — subject to applicable dollar thresholds, reinvestment rights, and any carveouts for government refunds. This is a distinct question from the treatment of tariff refund entitlements in M&A purchase agreement provisions, which implicates a different set of allocation and drafting considerations.

Lenders and borrowers may also want to review accounting treatment. Tariff expense and tariff refunds generally flow through inventory accounting and cost of goods sold, and therefore through generally accepted accounting principles earnings, which may affect earnings before interest, taxes, depreciation, and amortization (EBITDA)–based leverage and fixed-charge coverage covenants and the availability of add-backs, exclusions, or nonrecurring item adjustments — particularly in negotiated EBITDA definitions that permit adjustments for “extraordinary,” “unusual,” or “nonrecurring” items.

In split-lien financing structures, Article 9 classification may not fully resolve priority. Parties should review the applicable intercreditor agreement and collateral definitions to determine whether tariff refunds are treated as asset-based-lending-priority collateral (e.g., as proceeds of inventory or accounts) or term-loan-priority collateral (e.g., general intangibles).

Third-party claims to refund value. Even where the importer is the sole party entitled to receive a refund from CBP, the economic value of that refund is increasingly being contested by other parties. Putative class actions have already been filed against importers on theories including unjust enrichment and state consumer protection statutes, brought by or on behalf of consumers who bore the cost of IEEPA tariffs through higher prices. Business customers of importers may also assert contractual recoupment claims under price-adjustment, surcharge pass-through, most-favored-nation, or change-in-law provisions and may pursue equitable theories where contractual hooks are absent. These actions can result in substantial unliquidated liabilities, settlement reserves, or court-ordered restitution that would reduce the importer’s net retained value from a CBP refund.

For lenders, this means that the gross refund receivable secured by a UCC-1 may overstate true collateral value. Borrowing base mechanics, advance rates, EBITDA add-back determinations, and reserve analyses should account for known and reasonably foreseeable third-party claims on refund proceeds. For purchasers acquiring tariff refund claims outright, the seller’s pricing, representations, and indemnification package should specifically address consumer class action exposure and customer recoupment claims as well as the creditworthiness of any indemnitor.

Practical Protections for Lenders

Given the novelty of tariff refund claims as a collateral class, where tariff claims are fundamental to the underwriting, lenders should consider protections beyond a standard UCC-1 filing:

• Specific collateral descriptions. The security agreement may supplement any blanket lien with language specifically referencing IEEPA tariff refund claims under § 1505(b), rights to file CAPE declarations and administrative protests under § 1514, rights to prosecute claims at the CIT, and all proceeds thereof. Known CBP entry numbers should be listed.
• Filing rights and servicing covenants. CBP guidance provides that only the importer of record or the customs broker that filed the original entry may submit the CAPE declaration. A lender or claims purchaser generally cannot file CAPE declarations directly. Financing or sale documentation may accordingly include cooperation covenants, powers of attorney, and servicing mechanics requiring the importer (and, where applicable, its broker) to pursue, document, and maintain the refund process at the lender’s direction, including timely filing of CAPE declarations and protests, preservation of supporting records, and good-faith cooperation with CBP and the courts.
• Controlled ACH accounts. The borrower may be required to enroll in CBP’s ACH refund program and designate a lender-controlled deposit account as the payment recipient. Under CBP’s current procedures, importers may designate an authorized “4811 party” through the ACE portal to receive refund payments on the importer’s behalf; the designated party must also have refund bank information registered in ACE. However, there is a practical risk — analogous to the well-known risk with IRS tax refunds — that CBP may not honor the designation and send payment directly to the borrower.
• Robust covenants. The credit agreement may require the borrower to timely file protests and CAPE declarations (with lender preapproval, given that declarations cannot be amended once submitted), obtain lender consent before settling or withdrawing any claim, provide regular status updates, and promptly deposit refund proceeds into the controlled account.
• CBP notification. Although CBP has no standardized process for recognizing security interests in refund claims, a written notice to CBP identifying the relevant entries and the lender’s security interest creates a record and may prompt CBP to contact the lender before taking action that would affect the claims.
• Diligence on prior claim sales. Lenders should confirm that the borrower has not previously sold or encumbered its tariff refund claims. A secondary market for the outright purchase of these claims has emerged, and a borrower that has already transferred its claims to a third-party investor cannot offer them as collateral. Due diligence should include a review of any claim purchase agreements, factoring arrangements, or other transfers as well as a UCC search for prior filings. Diligence may also confirm whether any entries are subject to unpaid CBP bills (which CBP may set off against refund payments), surety-paid duties, reconciliation, drawback, USMCA duty deferral, open or suspended protests, AD/CVD suspension, or other CAPE exclusions, each of which may affect refund eligibility, timing, or net recovery. Diligence should also include a search for pending or threatened consumer class actions (including unjust enrichment and state consumer protection theories), customer demand letters, contractual recoupment claims, and any settlement or reserve activity that could reduce the borrower’s net retained value from the refund.

A note on UCC § 9-408. Section 9-408 renders certain state-law restrictions on assignment ineffective for purposes of creating and perfecting a security interest. However, it does not — and cannot — override federal statutory restrictions such as the Assignment of Claims Act, (ACA).⁵ Moreover, § 9-408(d) provides that the resulting security interest is not enforceable against the account debtor (here, the U.S. government) and does not require the government to recognize the interest or redirect payment. In practical terms, a lender may be able to perfect a security interest in a tariff refund claim by filing a UCC-1, but it cannot compel CBP to recognize that interest.

The Assignment of Claims Act

The emerging market for the sale and financing of tariff refund claims raises a distinct legal question under the ACA. The ACA provides that an assignment of a claim against the United States is valid only after the claim has been allowed, the amount decided, and a warrant for payment issued. Its definition of “assignment” is broad, covering “a transfer or assignment of any part of a claim against the United States Government or of an interest in the claim, or the authorization to receive payment for any part of the claim.”

Importantly, courts have recognized limits on the ACA’s reach. In United States v. Kim,⁶ the Ninth Circuit held that while the ACA voided an assignment of attorney’s fee awards payable by the United States, “voiding the assignment is the extent of the Act’s reach” and the Act “leaves the claim where it was before the purported assignment.”⁷ Critically, the court held that the ACA did not void an attorney’s lien arising by operation of California law, distinguishing between an assignee “stand[ing] in the shoes of the assignor and seek[ing] payment directly from the United States” (prohibited) and a lien or interest in proceeds once paid to the original claimant (permitted). The court relied on Martin v. National Surety Co.,⁸ in which the Supreme Court confirmed that the ACA “reaches only the initial payment from the Treasury.”

Implications for security interests. There is an argument that a lender’s security interest in a tariff refund claim does not constitute a prohibited “assignment” under the ACA. The borrower remains the claimant of record; the lender’s interest is in the proceeds, not the claim itself. The Kim court’s distinction between voided assignments and surviving state-law liens provides support for this position: A UCC Article 9 security interest, like the attorney’s lien in Kim, arises by operation of state law and attaches to the debtor’s rights in collateral rather than substituting the secured party as the claimant before the government. That said, Kim is a Ninth Circuit decision, it has not been adopted in all circuits, and its extension to UCC security interests (as opposed to attorney’s liens) has not been tested. Lenders may consider documenting the arrangement in a manner consistent with the ACA’s formal requirements as a precaution.

Implications for outright sales. The ACA may present greater risk for outright purchasers of tariff refund claims. The statutory prerequisites — that the claim be “allowed,” the amount “decided,” and a “warrant for payment” issued — are likely not met for most IEEPA claims at this time: Although CBP launched the CAPE system on April 20, 2026, public reporting on completed refund payments remains limited as of April 30, 2026, and for most entries CBP has not yet issued a formal reliquidation. An assignment made before these conditions are satisfied could be void or voidable. However, as the Ninth Circuit held in Kim, the ACA “leaves the claim where it was before the purported assignment” — it does not extinguish the underlying right to refund. Buyers may wish to contract for the seller’s obligation to pursue payment directly, combined with the buyer’s right to any proceeds received — a structuring approach consistent with Kim and Martin.

The Emerging Secondary Market

Based on approximations drawn from journalistic accounts, a secondary market estimated at up to $100 billion has emerged around tariff refund claims as of April 2026. Hedge funds and private credit funds have reportedly been purchasing claims from importers, with claims reportedly trading at up to 60 cents on the dollar (up from approximately 20 cents before the Supreme Court’s ruling). Press reports indicate that commercial banks, hedge funds, and private credit funds are also offering term loans secured by refund claims, typically structured with payment-in-kind interest, loan-to-value ratios of approximately 50%, and minimum loan sizes of $10 million against claims of at least $20 million. These figures should be understood as journalistic approximations rather than verified market data; precise terms will vary by transaction.

Political, Legislative, and Regulatory Risk

Government appeal risk. The government’s deadline to appeal the CIT’s nationwide refund order in Euro-Notions runs through early June 2026. The government is widely expected to challenge the CIT’s authority to issue a nationwide order applying to all importers of record, likely citing the Supreme Court’s recent standing and remedial jurisprudence. If an appeal is filed and a stay is granted by the Federal Circuit, the CAPE refund process could be suspended and refund payments significantly delayed.

Section 122 replacement tariffs. Following the Learning Resources decision, the administration imposed replacement tariffs under Section 122 of the Trade Act of 1974⁹ — a 10% additional tariff on most imports, effective February 24, 2026, subject to exceptions for goods already covered by Section 232 tariffs, goods qualifying for preferential treatment under the USMCA, and certain other categories. Section 122 contains a hard 150-day statutory limit, meaning these tariffs expire approximately July 24, 2026, unless Congress enacts legislation extending them. On February 21, 2026, the President posted on social media that the rate would be increased to the 15% statutory cap permitted under Section 122, but no implementing order has been issued to date. The interaction between the IEEPA refund process and Section 122 duties — including whether Section 122 duties may be offset against IEEPA refunds — is an area to monitor.

Congressional activity. Several bills have been introduced in Congress relating to IEEPA tariffs. The Tariff Refund Act of 2026 (S 3905) is directly relevant to importers: It would require CBP to refund all duties imposed under IEEPA within 180 days of enactment, with interest, and would prioritize small businesses in the refund process. Other bills take a different approach. The Trump Tariff Rebate Act (HR 6781) and the American Consumer Tariff Rebate Act of 2026 (HR 7865) are consumer-oriented tax measures that would provide rebates to individuals and families through the tax code rather than mandating CBP to expedite importer refunds. None has passed as of this writing, but S 3905 in particular could affect the refund timeline and process if enacted.

Key Takeaways

• Tariff refund claims could be classified as general intangibles (or payment intangibles) under UCC Article 9, perfected by UCC-1 financing statement filing. However, no court has addressed when such a claim ripens into “property” for attachment purposes, and bankruptcy prior to ripening presents real risk under § 552(a).
• Where tariff claims are fundamental to the underwriting, lenders may wish to file UCC-1 financing statements with specific collateral descriptions, establish lender-controlled ACH accounts designated through CBP’s ACE portal, and negotiate robust covenants — particularly lender preapproval of CAPE declaration filings, which cannot be amended once submitted.
• The ACA presents some risk for outright sales of tariff refund claims. However, the Ninth Circuit’s decision in Kim provides a framework for arguing that a properly perfected UCC security interest may survive ACA scrutiny, at least as to proceeds once paid to the borrower.
• Existing credit agreements with mandatory prepayment sweep provisions triggered by extraordinary receipts may capture tariff refund proceeds, and lenders should review applicable thresholds, reinvestment rights, and carveouts. Lenders should also confirm through diligence that the borrower has not previously sold or encumbered its refund claims.
• The gross refund payable by CBP may not equal the net value retained by the importer. Putative consumer class actions (asserting unjust enrichment and state consumer protection theories) and contractual recoupment claims by business customers can materially reduce the realizable value of refund collateral, and lenders and claims purchasers should diligence and reserve accordingly.
• The government’s appeal deadline for the CIT’s nationwide refund order runs through early June 2026. A successful appeal could stay the CAPE process and significantly delay payments. Market participants should monitor CIT litigation, CBP regulatory developments, and legislative activity closely.

Private Credit Perspectives is a monthly series focused on legal and market developments impacting private credit investors.

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¹ 607 U.S. ___ (2026) (consolidated with Trump v. V.O.S. Selections, Inc., No. 25-250).

² 382 U.S. 375 (1966).

³ 422 B.R. 783 (Bankr. S.D. Fla. 2009).

⁴ See also 680 F.3d 1298 (11th Cir. 2012) (reinstating the bankruptcy court’s opinion).

⁵ 31 USC § 3727.

⁶ 806 F.3d 1161 (9th Cir. 2015).

⁷ Id. at 1175.

⁸ 300 U.S. 588, 597 (1937).

⁹ (19 USC § 2132).