CUSTOMER FILES FOR BANKRUPTCY: WHAT NEXT?
Customers filing for Chapter 11 or 7 Bankruptcy are a fact of life, yet few companies have any standard procedures to monitor for such filings or alert them as to what procedures should be followed with the bankruptcy court. Bankruptcy provides Debtors [formerly known as your customer] with various tools to shed contracts and financial obligations. It also permits them to reorganize their business and sell valuable assets. Suppliers which find themselves thrown in the mix of creditors and otherwise interested parties of the Debtor often have very little time to respond and properly determine if they should even be involved. The First Steps of Bankruptcy: Subsequent to the Bankruptcy petition filing and the dreaded “Automatic Stay” which freezes collection efforts against the Debtor, the Debtor will file the bankruptcy petition along with what are termed the “first day orders”. These orders are filed to have the court approve retention of employees, special treatment for so