Checking The Status Of A Bankruptcy Case or Are We Going To Collect This Debt?
A credit manager in Tulsa, Oklahoma called me today and said a customer who is in chapter 11 owes her employer a bunch of money. She asked, “how do I find out what is really going on and how much is my company going to collect on that account?”
I told her that in 2005 our friends in Congress added a new provision to the Bankruptcy Code to make things more transparent for creditors. The Bankruptcy Code now says that official creditors committees formed under the Code shall provide access to information for unsecured creditors that are not appointed to the committee.
The provision is a little ambiguous, but I suggested that the caller send a couple of friendly letters to the committee chair and lawyer. She’ll probably have to follow-up with a couple more phone calls and letters; and she’ll want to let them know that she is writing pursuant to Section 1102 (b) (3) of the Bankruptcy Code. As the attorney is working by the hour, he should be happy to take her calls (at the expense of the Debtor most likely).
Most of these professionals are actually very nice people. I suggested she ask what information can the committee provide to help her evaluate the prospects for recovery by unsecured creditors and can the committee provide an estimate of the timing of distributions?
She can also ask what are the prospects for the rehabilitation of the Debtor, or will the customer’s business be sold as a “Going Concern” (bankruptcy lingo for an operating business as opposed to a closed business).
In the future I’ll write more about this. And if you get notified that one of your customers has filed for chapter 11, please feel free to call or email my office right away.
I told her that in 2005 our friends in Congress added a new provision to the Bankruptcy Code to make things more transparent for creditors. The Bankruptcy Code now says that official creditors committees formed under the Code shall provide access to information for unsecured creditors that are not appointed to the committee.
The provision is a little ambiguous, but I suggested that the caller send a couple of friendly letters to the committee chair and lawyer. She’ll probably have to follow-up with a couple more phone calls and letters; and she’ll want to let them know that she is writing pursuant to Section 1102 (b) (3) of the Bankruptcy Code. As the attorney is working by the hour, he should be happy to take her calls (at the expense of the Debtor most likely).
Most of these professionals are actually very nice people. I suggested she ask what information can the committee provide to help her evaluate the prospects for recovery by unsecured creditors and can the committee provide an estimate of the timing of distributions?
She can also ask what are the prospects for the rehabilitation of the Debtor, or will the customer’s business be sold as a “Going Concern” (bankruptcy lingo for an operating business as opposed to a closed business).
In the future I’ll write more about this. And if you get notified that one of your customers has filed for chapter 11, please feel free to call or email my office right away.