When your company receives notice from a customer that the customer has filed for bankruptcy protection, what do you do? What should you do? First, DO NOT ignore it. The bankruptcy most likely will not go away. Instead, take these five steps to ensure you do not end up sideways in the bankruptcy.

1. Notify your Accounts Receivable Department not to send further collection notices or seek to collect the debt.

Continuing to collect the debt will result in a violation of the automatic stay, which carries steep penalties, including punitive damages and attorneys’ fees. Once anyone at your company has notice of the bankruptcy, everyone in your company is deemed to have notice, so your A/R department cannot complain that it did not receive its own notice.

2. See if there is a need to file a Proof of Claim.

The notice of the filing will indicate whether you need to file a Proof of Claim at that time. You may also get a subsequent notice to file. If you get this notice, use the form provided or available in most bankruptcy courts on-line, and provide all documentation showing the amount due from the debtor. Make sure to timely file this claim so that you reserve your place in line to be paid with similarly situated creditors.

3. Decide whether to attend the First Meeting of Creditors.

The First Meeting of Creditors, also known as the 341 Meeting, is an opportunity for creditors to briefly question the debtor on the debt and to obtain some insight into how the case might proceed. It is usually brief (5-15 minutes, at most), so probably not worthwhile to travel great distances to attend. However, depending on the amount at stake and the insight you have into the debtor’s business, it may be worthwhile to learn more and have an opportunity to question the debtor.

4. Note other pertinent deadlines.

The original notice you receive will have deadlines set forth on it, including the deadline to file a Proof of Claim (if one has been set), the 341 Meeting date, and time and a deadline to file nondischargeability actions. If you believe your claim may be nondischargeable (if, for example, the debtor obtained money, property or services from you by false pretenses/fraud, among others), this is an important deadline to note and with which to comply.

5. Obtain counsel, if necessary.

If the amount you are owed is either listed inaccurately or not listed at all, or if you are going to be seeking the nondischargeability of the debt, objecting to a proposed plan of the debtor, seeking relief from the automatic stay or taking other legal action within the bankruptcy, you should retain suitable legal counsel to assist you in doing so. Bankruptcy is a complex world where a small detail can change an outcome dramatically, so you want someone who is familiar with the consequences of actions or failing to act in a bankruptcy case.