It's a hard time to be a company.
There seems to be no end to the series of catastrophes affecting us: COVID, an economic meltdown, trade wars, and the cancellation of Bojack Horseman on Netflix. Companies are feeling most of these disasters, and many are declaring bankruptcy.
You are a creditor and they owe you. How do you ensure you'll be paid back (or refunded)?
When a company that owes you money files for bankruptcy, you must immediately stop attempting to collect the debt directly from the debtor. (To do otherwise could violate the bankruptcy code and get you sued!) Read on to find out what you can do next:
It may or may not be worth it to pursue your rights.
- Consider how much money you are owed and your relative priority for repayment; are you likely to be repaid at all?
- Is the bankruptcy a reorganization (Chapter 11/13) or a liquidation (Chapter 7)?
- Are you a secured creditor (and if so, has that security interest been perfected)?
- Do you have priority of repayment over other creditors?
(Of course we would be happy to help.)
The bankruptcy filing notice you received will give you a deadline by which to complete this task. File your claim! You can download the form online and it only costs $20 to file. If you fail to file your proof of claim, you forfeit your chance to participate in the bankruptcy process.
(You don't need a lawyer, but we would be happy to help.)
This is a meeting with the trustee and the debtor that any creditors can attend. They will present their plan to reorganize and repay their debts. You will have an opportunity to object if you don't feel that the debt you're owed is being treated fairly. (You needn't ask; we would be happy to help.)
You can follow along with what is happening in PACER (Public Access Court Electronic Records).
(Sure, we would be happy to help.)
Gee whiz, this sounds laborious. How can I make sure I have the best chance of being repaid by my counterparties?
Short answer: call your attorney.
Longer answer: ensure that your debt is secured with a deposit, collateral, third party guarantee, or other form of "insurance".
(Yes, we would be happy to help.)
Originally published 17 August 2020
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
