If your debtor has filed bankruptcy, you should receive a Notice to Creditors from the Bankruptcy Court regarding the specifics of that filing. However, in this case, you apparently have not yet received such a notice. Therefore, contact the debtor and ask him for the bankruptcy case number and the court in which the bankruptcy was filed.

Once you have this information, call the clerk of the appropriate court and confirm that a filing has actually taken place. Confirm it was a Chapter 11, and ask when the bar date is for filing a proof of claim. Also ask if your company is on the list of creditors filed with the Court.

If bankruptcy has been filed, here is a checklist of the next steps you should take:

Stop shipments in transit and arrange for return to your warehouse.
Stop all efforts to collect the past due account. The bankruptcy filing bars you from further action to collect on the debt.
Prepare and send a Reclamation Notice for any goods shipped within the reclamation period. The demand must be made within 10 days of the buyer taking receipt of goods. Or, if that 10 days expires after the commencement of chapter 11, within 20 days. (See our article on Reclamation Rights for further information on this aspect of the bankruptcy code.)
File a Proof of Claim before the bar date. Under chapter 11, creditors are not required to file a Proof of Claim if the debt is listed correctly in the schedule of liabilities prepared by the debtor/Trustee, and if the debt is not listed as "disputed," "contingent" or "unliquidated." However, many attorneys recommend that unsecured creditors always file a Proof of Claim, just to be on the safe side. And, since you haven’t received a Notice to Creditors, it is possible the debtor didn’t list you as a creditor. (See our article on Proof of Claim for further information.)
Review payments received from the bankrupt debtor within 90 days preceding the bankruptcy filing date. These may be subject to preference claims (see our article on Preferences). Do not automatically pay any preference demands.
Calculate how much product was shipped to the debtor in the 90 days prior to bankruptcy filing.
Gather copies of all invoices open on the filing date, along with copies of the entire account statement.
Gather proofs of delivery on all open invoices.

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Disclaimer: This article is not intended to be legal advice and is not a substitute for competent legal advice on the referenced subject.

Information provided by ABC-Amega Inc. Since 1929, providing first party accounts receivable collections outsourcing and third party debt collection for management of your commercial receivables portfolio. For further information on our receivable management services, email info@abc-amega.com.