The current economic climate has led to an increasing number of
bankruptcy filings. This article summarizes some important
strategic considerations and initial steps that can be taken upon
learning of such a filing by your customer or vendor in order to
help minimize risks while maximizing your potential return in the
bankruptcy.
Prompt Action and Verification of Bankruptcy
The first thing to do upon learning of a bankruptcy filing is to
review the contract. Contract review helps to verify all of the
entities that may be liable for the indebtedness which may include
an entity not in bankruptcy. This review may also show that the
party liable for the receivable did not actually file for
bankruptcy, but that it was instead an affiliate or related entity.
If the entity listed on the contract did not actually file
bankruptcy, then you may proceed with your typical protocols for
collection of the full balance.
