Section 546(c) of the Bankruptcy Code and the Uniform Commercial Code permit a creditor to make a timely written reclamation demand to the debtor to recover goods sold in the ordinary course of the creditor’s business and received by the debtor within 45 days of bankruptcy.
The written demand must be made within: (a) 45 days of the debtor’s receipt of the goods; or (b) 25 days from the petition date if debtor filed bankruptcy within 45 days of receiving the goods.
The reclamation process is quite onerous, and creditors may be better served if they qualify for a § 503(b)(9) claim.
Learn more about §503(b)(9) claims in Trade Tip #6.
Section 341 of the Bankruptcy Code requires the U.S. trustee to hold a meeting of creditors (usually in the first 60 days after the petition date) to give creditors and the U.S. trustee the opportunity to ask the debtor questions about debtor’s conduct, assets, liabilities and any matter that may affect administration of the case. The debtor is required to attend and must answer these questions under penalty of perjury. While creditors are not required to attend §341 meetings, and they don’t waive any if they don’t attend, attendance is highly encouraged to get answers to their questions from the debtor.
Want to learn more? Read Dealing With Distress For Fun & Profit – Installment #6 – The Mundane Middle of A Bankruptcy Case by George Kuney and Jonathan Friedland.
If your customer filed bankruptcy, first find out whether the bankruptcy is a chapter 11 or chapter 7. Generally, debtor continues to operate under chapter 11 and ceases operations under chapter 7.
Second, obtain copies of all documents filed in the case to understand the facts and circumstances and identify any upcoming deadlines. These documents can be retrieved from Public Access to Court Electronic Records (PACER) system.
Third, file a notice of appearance under Federal Rule of Bankruptcy Procedure 2002 to receive future pleadings and other documents filed in the case.
Finally, makes sure you attend the §341 meeting to examine the debtor under oath about its assets, liabilities, plans regarding reorganization.
You can learn more by reading What to Do In the Event of a Customer Bankruptcy by Michael A. Brandess.
The filing of a bankruptcy petition automatically stays substantially all litigation, lien enforcement, or other activities that a creditor might undertake to enforce its claim against the debtor or its property. Section 362 of the Bankruptcy Code imposes the automatic stay; no court order is required. Moreover, the automatic stay applies in every bankruptcy case regardless of the chapter under which relief was sought and regardless of whether the case was voluntary or involuntary.
Want to learn more? Read Dealing With Distress For Fun & Profit – Installment #10 – About the Automatic Stay By George Kuney and Jonathan Friedland
Section 501 of the Bankruptcy Code expressly authorizes a creditor to file a proof of claim. With limited exceptions, a prepetition creditor that wishes to be eligible to receive a distribution from a debtor’s bankruptcy estate must file such a proof of claim.
Want to learn more? Read File Early and Often: Filing and Amending Claims in a Bankruptcy Case by Michael Schwarzmann and David Gottlieb.