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Important Initial Considerations

When a Customer or Vendor Files


Bankruptcy
Prompt Action and Verification of
Bankruptcy

 Review the Contract

 Verify that a bankruptcy has actually been


filed and to obtain information on the
particular bankruptcy case.
Take Steps to Avoid a Violation of
Automatic Stay

 Inform all of the internal people involved in


the particular account
◦ Information sharing will help to avoid unintended
violation of the bankruptcy code’s automatic
protection of entities in bankruptcy from collection
actions.
Reclamation of Goods

 The Bankruptcy Code also provides a mechanism for


sellers to reclaim goods shipped to an insolvent buyer.

 This is only applicable if the property recovered is:


◦ A good
◦ It was sold in the ordinary course of business
◦ Buyers was insolvent when it took physical possession
◦ Written demand for return of the good was made within a brief
fixed timeframe of buyers' possession.
File a Proof of Claim

 It is important to make sure that a proof of


claim is timely filed with the bankruptcy court

◦ An attorney is not necessary to prepare an file a


claim
Determine Your Level of Involvement
in the Bankruptcy
 May be worth pursuing an appointment to the
creditor’s committee

◦ The meeting of creditor's is an informal hearing


where any creditor may appear and ask questions
of the debtor on the record.
The most important step to minimizing risk and
maximizing return as a creditor in a bankruptcy
case is to compile as much information as
possible in order to preserve certain rights and
to develop a strategy for the case.

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