When a key customer files for bankruptcy, your company’s cash flow and contract rights are on the line. Zecca Ross Law helps founders navigate post‑petition sales, protect claims, and decide whether to keep doing business with a distressed customer.
Getting paid after a bankruptcy filing
Post‑petition sales in a Chapter 11 case are typically treated as administrative claims and can be paid in the ordinary course, but you should confirm terms in writing and understand whether the transaction is “ordinary course” or needs court approval.
Know your contract position
- If you operate on purchase orders only, you can usually decide whether to keep selling and on what terms.
- If you have an executory contract, you may need to continue performing unless the debtor assumes or rejects the contract with court approval.
Assess creditworthiness post‑petition
Even in Chapter 11, a debtor must have liquidity to pay post‑petition obligations. Review available financial reports and consider whether DIP financing affects your priority in a downside scenario.
When to involve counsel
If payments are delayed, terms are unusual, or your exposure is significant, consult bankruptcy counsel early. Zecca Ross Law can help preserve your claim, negotiate protective terms, and coordinate motions if needed.
Dealing with a bankrupt customer can be complex—contact Zecca Ross Law for guidance tailored to your specific contracts and risk profile.
Related content