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Bankruptcy Checklist Information
By Michael C. Dennis, MBA, CBF

I encourage my clients to use a systematic approach to almost every aspect of the credit and collection function ---- including handling a notification that a customer has filed for bankruptcy protection. Using a pre-printed Checklist can prevent costly mistakes and save time. Included on my Checklist are the following steps:

  • If you have not received anything in writing from the customer, "delicately" confirm the rumor of a bankruptcy filing.

  • If the customer indicates a bankruptcy filing occurred, ask for:

    • The date of filing

    • The type of filing

    • The case number

    • The name of the Debtor's attorney

    • The Court in which the bankruptcy was file

  • Promptly send a reclamation notice on shipments sent within the reclamation period as described in the U.S. Bankruptcy Code.

  • Review payments received from the debtor within 90 days of the bankruptcy filing date to determine if there are any potential preference claims.

  • Also calculate how much product was shipped to the debtor in the 90 days preference period.

  • Reprinting copies of all outstanding invoices as of the filing date, as well as any debits and credits open at the time.

  • Reprint an account statement as of the bankruptcy filing date.

  • Order proof of delivery on all open invoices immediately.

  • Copy all checks your company issued to or received from the debtor in the 90 look-back preference period as defined in the Bankruptcy Code.

  • Make copies of all of these documents and place them aside for safekeeping.
    One final comment: Promptly review every document you may receive from the Bankruptcy Court. If you are unsure whether action is required on your part, ask.

    Reprinted with permission from the Covering Credit Newsletter 9/19/02 Edition
    © 2001 All Rights Reserved

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