corporate bankruptcy.

February 7, 2006 12:06 PM

Company A just went bankrupt, but owes Company B money. How should Company B proceed?

Company B wants to be listed as a creditor, so who should they check with? Company B also has been recently paid a large sum of money by Company A the week before Company A went bankrupt....can the courts force Company B to pay that to other creditors or to the (potential) trustee?

posted by taumeson to law & government (6 comments total)

1. Which version of bankrupt? Chapter 7? 11? Something more exotic?

2. If the large sum of money was not cash in advance and was not ordinary course of business, expect to see a preference claim and expect to lose that money.
posted by selfnoise at 12:21 PM on February 7, 2006

They should talk to their lawyer.
posted by bshort at 12:27 PM on February 7, 2006

Yeah. See above.
posted by selfnoise at 12:36 PM on February 7, 2006

Company B wants to be listed as a creditor
If Company A is going with Chapter 13, and a payoff plan, Company B's lawyer has to file paperwork with the bankruptcy court clerk. Regardless, the debt still exists and failure of Company A to present all outstanding debts it wants protection on, to the court, just means said debt is still outstanding under it's original terms, and Company A doesn't have a new agreement forced upon that creditor, by the court.

Company B also has been recently paid a large sum of money
Yes, the court can force Company B to give the money back to creditors under certain circumstances. Say if someone at Company A realized things were about to go bad, sets up Company B, creates some work orders, makes payment to Company B, then declares bankruptcy. In said example, IF the court realized what had happened, it would sanction both parties, likely.
posted by nomisxid at 12:37 PM on February 7, 2006

the bankruptcy court in your district will have a trustee (this is different from the specific trustee who is appointed for each bankruptcy). i've never encountered a trustee who wasn't willing to answer a few basic questions for people owed money by someone who has filed for bankruptcy.

the clerk of your bankruptcy court (e.g., the middle district of florida) might also be able to direct you to some basic information about what steps to take next. some clerks will; some won't.

the proof of claim is easy to fill out, easy to file, and should be sent to you automatically by the entity which has filed for bankruptcy. there is, generally speaking, no purpose to retaining your own attorney when you are owed a small, single debt in these circumstance. (i know, a "small" debt is relative, but look at it in the context of the debtor and be realistic). the bankruptcy process is highly ritualized and there's not much a single debtor can do. just look at UAL disclosures. however, if you have general counsel or someone already on retainer, let him or her handle the forms.

usual disclaimer, i am an attorney, but not your attorney. this is not legal advice.
posted by crush-onastick at 12:47 PM on February 7, 2006

thanks everybody. not sure what kind of bankruptcy, yet.
posted by taumeson at 11:34 AM on February 8, 2006