Receiving a notice from a Bankruptcy Court that someone who owes you money is filing for bankruptcy is frustrating, at best. Secured creditors need to protect their collateral, but maneuvering through the bankruptcy process is often a difficult endeavor. Certain unsecured creditors get priority treatment, which means that their claims must be paid in full before other general unsecured claims if the creditor asserts its right to the priority treatment. Additionally, some steps must be taken in order to obtain any payment, no matter how small, and some steps can be taken to obtain a better percentage payout. PLDR can guide you and your company through the bankruptcy process and help you obtain a better result based on your particular position with the debtor.
Among the numerous services that PLDR provides to help creditors collect on delinquent debts are the following:
A sizeable percentage of bankruptcy cases result in some kind of payout to creditors, even if the payment is only a small percentage of the total debt owed. Many creditors miss out on receiving their payments because the creditors fail to file a proper claim. For cases that do provide a creditor payout, failure to file a claim means other creditors will receive more of the payout. For a creditor with collateral, the creditor can be paid in full up to the value of the collateral. PLDR will ensure that your proof of claim is prepared and filed correctly, which will help you receive the payment owed to you.
In many Chapter 11 cases, certain suppliers of the debtor are necessary for the debtor to continue its business during the case. If your company is such a vendor, PLDR can help you negotiate an agreement with the debtor to provide you with better treatment than other unsecured creditors as a “Critical Vendor” in exchange for your agreement to continue to supply the debtor. This can include full payment of your debt and/or priority claim treatment for your debt.
In many cases, rent that is owed to a landlord for commercial property gets special treatment. Sometimes even rent owed to a landlord for a residential property can receive special treatment. The Bankruptcy Code requires a bankruptcy trustee or debtor to pay the first several months of rent on non-residential real estate in a timely manner. Trustees and debtors, however, do not always pay this “administrative rent.” PLDR can help you obtain your “administrative rent” when it is due and can have such rent afforded priority treatment in the case.
If your company has supplied the debtor with goods on credit shortly before the bankruptcy case is filed, you may have a claim for reclamation. Reclamation is a claim to have your specific goods returned to you if the goods were purchased on credit at a time when the customer was insolvent. Even though the specific goods might no longer be available, properly asserting your reclamation claim can result in a priority claim in place of the right to the return of the goods. Priority claims must be paid in full before other general unsecured claims. This can turn your company’s claim into one that is paid in full, instead of one that is only paid a small percentage of the total amount. Reclamation claims, however, must be made and filed very quickly, generally within 20 days after the bankruptcy case is filed. PLDR is ready to prepare and file reclamation claims as quickly as possible after receipt of your information.
The frustration of receiving a bankruptcy notice can be amplified to shock and disbelief if a Bankruptcy Trustee sends you another notice that you might owe money back to the Bankruptcy Estate. Payments made shortly before the case is filed can be treated as “preference claims,” which the Trustee is allowed to set aside and recover. Unfortunately, many creditors don’t know that there are defenses to such preference claims and that they might not have to return any of the money. PLDR can help your company determine and assert defenses to preference claims, to avoid adding insult to injury.
Similar to preference claims, a Bankruptcy Trustee can claim that transfers by a debtor to third parties before the case was filed should be set aside if the transfers were made without the debtor receiving anything of value (Voluntary Conveyances), what the debtor did receive was not of equivalent value to what the debtor transferred to the third party, or the transfer was made with the intent to hinder or delay creditors from collecting their debts (Fraudulent Conveyances). PLDR can help you assert available defenses to Voluntary Conveyance and Fraudulent Conveyance claims.
Some debts are not dischargeable through bankruptcy because of public policy. With non-dischargeable debts, the debtor continues to owe the debt to the creditor despite having filed a bankruptcy case. The most common non-dischargeable debts are debts based on fraud (including presenting misleading credit applications), embezzlement, theft, willful and malicious injuries, certain tax debts, and domestic support obligations. For certain non-dischargeable debts, it is important to know that the creditor must file a timely proceeding in the Bankruptcy Court and request that the Court rule that the debt is non-dischargeable. PLDR’s attorneys can help your company file such proceedings to obtain an order that the debt is non-dischargeable and that the debtor still owes you in full, despite the bankruptcy.
The debtor’s plan in a Chapter 11 or Chapter 13 case will bind creditors to its terms once the Court confirms it. If the plan does not treat your claim as is required by the Bankruptcy Code, you must file a timely objection to the plan in order to contest your improper treatment. PLDR regularly files and argues objections to plans for our clients and, in many cases, addresses them with the debtor’s attorney in advance to eliminate the need for a court hearing.
The filing of a bankruptcy by a debtor acts as a court injunction to creditors to stop all collection activity and, in general, to stop all court proceedings against a debtor. PLDR often obtains relief from that injunction by seeking the Bankruptcy Court’s permission to move forward with our clients’ usual legal remedies despite the bankruptcy filing. This often includes permission to foreclose on or repossess collateral when the debtor is not making payments, to force eviction of non-paying tenants, to file certain claims in state or federal court that are unrelated to the bankruptcy case, and to continue other suits that were already in progress before the debtor filed for bankruptcy.
PLDR’s clients include commercial lenders, trade creditors, judgment creditors, landlords, tenants, and anyone else who is in a relationship with a person or business that has filed a bankruptcy case. We are well equipped to handle all aspects of creditor representation. When appropriate, we work out sensible deals with debtors, trustees, and other parties in a bankruptcy case. If a reasonable settlement cannot be reached, PLDR stands ready to litigate matters in Bankruptcy Court to protect our clients and their financial interests.
