The following is a list of some recent larger U.S. bankruptcy filings in various industries. To the extent you are a creditor to any of these debtors, or other entities which may have filed for bankruptcy protection, you as a creditor are entitled to certain protections under the Bankruptcy Code.
HEATING & AIR CONDITIONING
Wolverine Tube Inc. and several affiliates filed prearranged Chapter 11 petitions after reaching a deal with noteholders.
Ambac Financial Group Inc. filed for Chapter 11 protection.
American Media, Inc., the National Enquirer publisher, plans to file a prepackaged Chapter 11 plan.
As a result of a bankruptcy filing, an automatic stay is put into effect prohibiting creditors from seeking to take certain action outside the bankruptcy proceedings to collect amounts due to them from the debtor which arose prior to the filing of the bankruptcy petition. Nonetheless, you as a creditor may be entitled to take certain legal action. For example, if you are a supplier who has shipped goods which were received by the debtor within forty-five (45) days prior to the Bankruptcy filing, you should submit a timely reclamation demand in order to recover possession of your products, or, at the debtor's option, receive a higher priority administrative claim as to those goods when compared to a typical unsecured claimant thereby significantly increasing the likelihood of receiving payment. In order to have the court consider such a demand, you must timely submit the reclamation demand in writing.
As part of court orders entered shortly after the filing of the case, the Bankruptcy Court may grant the debtor the discretion to pay certain "essential suppliers" – to be determined by the debtor – all or some of the pre-petition amounts due in exchange for an agreement to, among other things, continue supplying in accordance with similar terms. If deemed to be one of these "essential suppliers," a letter outlining this agreement will be sent to you by the debtor. However, you can take certain action now to increase the likelihood of being designated a critical vendor.
The Court may also enter an order granting an administrative expense priority to creditors in connection with any products received by the Debtor shortly before and after the bankruptcy filling.
Please note that the filing of the bankruptcy petition by the debtor may relieve you from the agreements and understandings that you have exchanged with the debtor. Alternatively, if your agreement is assumed by the debtor, all amounts due to your company may be paid. You may have options available to you that may minimize your company's exposure under these proceedings; however, this would require a complete review of your agreements with the debtor.
The above is just a brief, preliminary advisory for informational purposes only and is not intended to replace legal counseling. If you require further information about the filing, have specific questions about your dealings with a company filing for bankruptcy or would like our assistance to take action to protect any claims you may have, please feel free to contact us.