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:
Promptly send a reclamation notice on shipments sent
within the reclamation period as described in the U.S.
Review payments received from the debtor within
90 days of the bankruptcy filing date to determine if there
potential preference claims.
Also calculate how much product
was shipped to the debtor in the 90 days preference period.
copies of all outstanding invoices as of the filing date,
as well as any debits and credits open at the time.
an account statement as of the bankruptcy filing date.
proof of delivery on all open invoices immediately.
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,
Reprinted with permission from the Covering
Credit Newsletter 9/19/02 Edition
© 2001 All Rights Reserved