Bankruptcy filings by customers continue to be an issue which business owners must deal with. According to reports recently released, third quarter 2009 bankruptcy filings increased by 33% compared to 2008. However, the third quarter 2009 business bankruptcy filings were slightly lower than the second quarter for 2009.
If you or your business encounter customers and/or vendors filing for bankruptcy, it is wise to consult your attorney as to what actions you can take to protect your rights to payment and/or your rights in existing contracts with the business which filed bankruptcy. Please remember that if your customer or vendor files for bankruptcy, there are certain actions which you may not take due to the automatic stay of the bankruptcy code.
If you have received payment from your customer within 90 days of your customer filing for bankruptcy, you may receive a letter as much as two years later requesting the payments received in that 90 day window to be returned to the bankruptcy court! This is called a preference payment. If you receive such a letter, we suggest you contact an attorney who practices creditor’s rights law. There are numerous defenses to the alleged preference payments which can be of advantage to you.
If you have questions concerning your customer or vendor’s bankruptcy filing, please feel free to call us to inquire how we can help you.