At least I'm not on the OTHER end of this affair
August 18, 2011 11:02 PM Subscribe
So I just learned I'm a creditor in a bankruptcy case. NOW what?
Real quick details:
* I'm in New York; the company's in Pennsylvania. The case is filed with the Pennsylvania courts.
* The company is an arts-related organization that announced it was folding about two weeks ago.
* This is for some work I did for them, and the company's debt to me involves a lowish amount (a little under 200 bucks). I'd had an ongoing relationship with them for several years, and while they weren't exactly TIMELY when they needed to pay me, I cut them a lot of slack because they eventually did pay after a couple of polite reminders. Also, I'm also in the arts I know just how tight things were and I didn't want to be That Guy. This bill was the first time I ever got to the third "reminder notice" for one of my invoices, in fact.
* A week after I heard they were folding, I received a notice from the PA courts informing me they'd filed Chapter 7, informing me of an upcoming optional "creditor's meeting", telling me NOT to use their office to seek legal advice, and telling me not to file a claim yet until they instructed me to do so. The creditor's meeting isn't until November.
So, short of waiting to hear from the court to file a claim, is there anything else I should....do? Is there paperwork I should start trying to dig up on my end? The letter I got seemed to imply that that "creditor's meeting" was not something I was required to attend, is that the case?
bonus question -- I've already kind of written off that money mentally, since it's such a small amount; am I right? How likely is it really that i'd get paid, even just some?
Real quick details:
* I'm in New York; the company's in Pennsylvania. The case is filed with the Pennsylvania courts.
* The company is an arts-related organization that announced it was folding about two weeks ago.
* This is for some work I did for them, and the company's debt to me involves a lowish amount (a little under 200 bucks). I'd had an ongoing relationship with them for several years, and while they weren't exactly TIMELY when they needed to pay me, I cut them a lot of slack because they eventually did pay after a couple of polite reminders. Also, I'm also in the arts I know just how tight things were and I didn't want to be That Guy. This bill was the first time I ever got to the third "reminder notice" for one of my invoices, in fact.
* A week after I heard they were folding, I received a notice from the PA courts informing me they'd filed Chapter 7, informing me of an upcoming optional "creditor's meeting", telling me NOT to use their office to seek legal advice, and telling me not to file a claim yet until they instructed me to do so. The creditor's meeting isn't until November.
So, short of waiting to hear from the court to file a claim, is there anything else I should....do? Is there paperwork I should start trying to dig up on my end? The letter I got seemed to imply that that "creditor's meeting" was not something I was required to attend, is that the case?
bonus question -- I've already kind of written off that money mentally, since it's such a small amount; am I right? How likely is it really that i'd get paid, even just some?
The creditor's meeting is a formality in your case. The only people who will attend are very close to the situation.
You will need to gather evidence that they owe you money to submit with your court claim. This would probably be a contract and an unpaid invoice.
99.9% chance you won't see a dime from this. You're the lowest of the low on the pecking order -- not unpaid wages, secured or liened debt in any way, etc.
posted by michaelh at 11:51 PM on August 18, 2011
You will need to gather evidence that they owe you money to submit with your court claim. This would probably be a contract and an unpaid invoice.
99.9% chance you won't see a dime from this. You're the lowest of the low on the pecking order -- not unpaid wages, secured or liened debt in any way, etc.
posted by michaelh at 11:51 PM on August 18, 2011
Response by poster: N.b., if you completed the work within 180 days before the filing, you're a priority creditor and stand a better chance of recovery. That changes the calculus a bit.
I did, actually -- the bill in question was dated mid-January, and has a past-due balance from June of 2010. They filed a couple weeks ago.
posted by EmpressCallipygos at 5:02 AM on August 19, 2011
I did, actually -- the bill in question was dated mid-January, and has a past-due balance from June of 2010. They filed a couple weeks ago.
posted by EmpressCallipygos at 5:02 AM on August 19, 2011
Response by poster: And for the record -- yes, I know I was REALLY, REALLY lenient with them. This has always been "extra money" for me, rather than a main income stream; they also did try really hard to pay me as they could, and I am part of a similar company myself here in New York and know full well the economic situation they were facing, so I really, REALLY cut them a lot of slack when it came to prompt payments.
posted by EmpressCallipygos at 5:04 AM on August 19, 2011
posted by EmpressCallipygos at 5:04 AM on August 19, 2011
The above advice is correct: you have a very small chance of being repaid here. Thankfully it's not much money. I do think you should still file the Proof of Claim linked by katemonster, since it's a simple form and it gives you the chance to get paid.
posted by Aizkolari at 5:40 AM on August 19, 2011
posted by Aizkolari at 5:40 AM on August 19, 2011
I've been to a lot of creditors' meetings, and I've never once seen a creditor actually show up at one of them.
posted by Eshkol at 6:39 AM on August 19, 2011
posted by Eshkol at 6:39 AM on August 19, 2011
I was involved in a large public corporation bankruptcy and the only folks who go to the creditors meetings are the lawyers and the consultants.
Fwiw, save your documents as they are a tax write-off as a business expense.
posted by JohnnyGunn at 7:19 AM on August 19, 2011
Fwiw, save your documents as they are a tax write-off as a business expense.
posted by JohnnyGunn at 7:19 AM on August 19, 2011
Same thing happened to me, also for ~200; I figured that as a small creditor/independent contractor I didn't have that much chance of getting paid anyway (compared with, e.g., the credit card companies that this client owed much more money to!), and decided that the chance of getting paid * the money I'd get was a lot less than the value of the time/hassle I'd spend chasing it, so I just ignored the letter, wrote off the money, and didn't attend the creditor's meeting or anything else.
posted by anotherthink at 7:58 AM on August 19, 2011
posted by anotherthink at 7:58 AM on August 19, 2011
write it off and move on. in cases like this, they are required to report all debt, small to large. it is likely there are creditors who have a much larger stake in this than you do and in the end, perhaps cutting your losses now will save you from losing more money trying to chase down a relatively small dollar amount.
posted by kuppajava at 8:00 AM on August 19, 2011
posted by kuppajava at 8:00 AM on August 19, 2011
And for the record -- yes, I know I was REALLY, REALLY lenient with them.
Write it off -- it's not worth your time to pursue the few cents on the dollar you might eventually get. As an aside: you sound like you're beating yourself up about this. Don't. You did what was essentially a favor for a small arts organization; you knew they were going to be high-risk and when they had trouble paying you didn't harass them about it. That makes you a good person, not a bad one.
posted by The Bellman at 8:13 AM on August 19, 2011
Write it off -- it's not worth your time to pursue the few cents on the dollar you might eventually get. As an aside: you sound like you're beating yourself up about this. Don't. You did what was essentially a favor for a small arts organization; you knew they were going to be high-risk and when they had trouble paying you didn't harass them about it. That makes you a good person, not a bad one.
posted by The Bellman at 8:13 AM on August 19, 2011
I'm not sure I'd totally ignore it -- filing a Proof of Claim form is not a terribly time-consuming process. As a creditor you'll receive notice of the time deadlines for filing a claim -- I would just file my claim form and wait to see whether anyone objects. There's a decent chance the claim will be accepted and you'll be put in line with all other unsecured creditors. When the pie is divied up, you'll receive your proportionate slice (however small that might be).
But I agree there is no reason to attend the creditors' meeting.
posted by pardonyou? at 8:31 AM on August 19, 2011
But I agree there is no reason to attend the creditors' meeting.
posted by pardonyou? at 8:31 AM on August 19, 2011
Response by poster: Thanks, all -- sounds like my instincts were right in that I don't really need to be at the meeting thing (which is good, because it's at 9 am on a Friday in central Pennsylvania), and that I should just sit tight until I get a call to fill out the form. I didn't have a contract with them that I can recall, but I have the invoices I can print up, and I'll just expect to get nothing and that if I ever do get something it'll be gravy.
I'm not sure how much good writing it off taxwise would do, because it's such a miniscule amount on something that's not even my main income stream (I've had times when my deductions for my writing were so low that it makes more sense to just claim the standard deduction and not bother itemizing).
posted by EmpressCallipygos at 9:12 AM on August 19, 2011
I'm not sure how much good writing it off taxwise would do, because it's such a miniscule amount on something that's not even my main income stream (I've had times when my deductions for my writing were so low that it makes more sense to just claim the standard deduction and not bother itemizing).
posted by EmpressCallipygos at 9:12 AM on August 19, 2011
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Attendance at the creditors' meeting is wholly optional. Creditors very rarely show up, and it doesn't sound like there's much reason for you to bother in this case. The big reasons to show up would be if you knew there was something hinky (e.g., they're hiding massive amounts of cash from the court, that sort of thing) and you wanted to get your objections to the bankruptcy on the record.
You're not likely to get much, if any, of your money out of this. There are probably secured and priority creditors in line ahead of you to get paid. The whole point of a Ch. 7 is liquidating the business's assets and distributing them. If you think they've got property worth something (e.g., a piece of land that will get sold to pay off the debts) then it might be worth putting some effort in on this. If, however, you're pretty sure they've just got office supplies and the like, your chances of recovery are somewhere between slim and none.
All that being the case, and having already written it off mentally, you might decide it's not worth your time to even bother filing your claim. If you do file, it's a form you fill out to which you attach copies of contracts, invoices, etc.
So basically, it's pretty much guaranteed you're not getting all your money (otherwise they wouldn't be filing). You're probably not getting most of your money. Chances are pretty good you're getting nothing, but there's also a chance you'll get some portion. You can only get that portion if you file your claim, but attendance at the creditors' meeting is not necessary.
N.b., if you completed the work within 180 days before the filing, you're a priority creditor and stand a better chance of recovery. That changes the calculus a bit.
posted by katemonster at 11:49 PM on August 18, 2011