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Bankruptcy - Customer shuts doors for good

Discussion in 'The Lounge' started by Reel Lady, Jun 8, 2005.

  1. Reel Lady

    Reel Lady Dreams DO come true!

    Ok.. I have a question for any of you who have knowledge of Commercial Bankruptcy.
    We have (oops.. I meant "HAD") a customer who evidently got themselves into financial trouble and we just learned that they have officially shut their doors.
    At this point, they owe us over $16,000.00 with a large percentage of this owed for parts that WE purchased to repair their machinery.
    I plan on contacting someone today, although not quite sure who at this point because we have never been in this situation before.
    My question is this...what, if any chance is there of us collecting any of this money that is owed to us?
    This is so upsetting because they have really done a great job of just stringing us along for a LONG time. And us, being the kind compassionate people that we are just kept buying their replacement/repair parts with our OWN money... assuming that we would be reimbursed...Our goal as a company is to keep our customers downtime to a minimum and maximize their production.
    Arghhhhh.....This is a big "Ouch" to a small company like us.
    This company was one of our first customers, and over the years they have been good customers too. About a year after we began our business, we switched our terms of service to "Payable at time of Service", but unfortunately, this company was Net 10 days. We learned that it is sometimes hard to collect once we have walked out the door, and personally, I have too many other things to do than be on the phone hounding people to pay their invoices!
    Anyway.. tell me your experiences with businesses and bankruptcy. Let me learn from your past experiences....
    Thanks all,
  2. mrfishohio

    mrfishohio Recovering Fishaholic

    Call a lawyer. With bankruptcies it can go several ways. One is they pay back nothing, one is they pay it back slowly ( by staying in business). I'm no expert, but I believe they post they are in bankruptcy and then all the creditors are on a list. The assets of the company are divided amongst the creditors. If you're not on the list and/or there are no assets, then nothing gets paid back.
    Call a lawyer, there might be some strings, like getting you on the top of the list or something, etc. Good luck.

  3. H2O Mellon

    H2O Mellon Hangin' With My Gnomies

    Well if they file a Chapter 7, you probally wont get anything, but if they file a Chapter 13, you may get a certain % of what's owed back to you. Has the BK actually been filed yet? Depending how on top of things they are, it may take a month or so, maybe longer before the BK is actually filed.
  4. captnroger

    captnroger OGF Webmaster

    Get ready for a wait, and get in line to get your money. Call a lawyer.
  5. Hook N Book

    Hook N Book The Original Hot Rod Staff Member

    Throw the compassion out the window and hire an attorney well versed in civil cases. The sooner you file the better. You make recoup a percentage of your losses through the liquidation of their assets. Also, you can possibly recoup some of your losses with a tax write off.
  6. I had a buddy that owned his own business. Mad boards for cell towers. Lucent got him on over 10 million in stuff. Needless to say he is no longer in business :( :( :( :(
  7. Reel Lady

    Reel Lady Dreams DO come true!

    I think I remember hearing that you cannot claim "Labor Hours" as a loss for tax purposes. Not totally sure though..
    As for the parts that we purchased (which are now incorporated into the pieces of machinery that we serviced), I'm not sure if we could claim that as a loss or not.
    I wonder if we could possibly put a lien on these particuliar pieces of machinery that we worked on? Hmm....

  8. That might work if you can prove that you worked on that exact piece of machinery. Good luck hope everything works out for you.
  9. As most have mentioned, it depends on what Chapter this individual filed for (Ch. 7 or Ch. 13). With the new legislation ready to be inacted, I'd bet it was a 7. If so, you have almost no chance of getting your money back, as all non-protected debts are discharged. If this was the case, I'd save my money on a lawyer and count your losses (unless you know a good lawyer who might give you some advice pro bono). Bankruptcy hurts us all. I'm glad that legislation is finally going to make it a little tougher to file a complete discharge (Ch. 7). Sorry to hear of your situation Marcia.
  10. It sucks been there,not with a company though just customers.Be happy to get any of the money,it is a tax right off though ;) call a lawyer and good luck.It realy hurts a small bus.everybody thinks you are rich just because you own one :mad: Like it is no big deal!
  11. Reel Lady

    Reel Lady Dreams DO come true!

    Where would I look to find out if they have officially filed for bankruptcy? I imagine this information would available to the general public, just not sure where.
  12. Go to the courthouse in the county where it was to be filed. It shoudl be in the Clerk's office. Bankruptcy is a public record and you have complete access to the records. In today's world, you can probably even find it online (look up the county's webpage).
  13. I have gone thru customers filing bankruptcy many times. First of all I would expect to get NONE of the money-at best you might get a very small percentageafter a long delay-but don't count on it. It is a full write off after the thing has been discharged-you need proof for your files and the taxman. If it a "bankruptcy" is in the federal courts and you will be notified shortly, but you can check with the federal court in your jurisdiction. Sorry the news is not better.
  14. First you need to find out how the business is listed..L.L.C..Partnership..Corp.
    To protect assets,they might have filed under an L.L.C..If not..You might be able to put a lein on any of their personal property...
  15. jwg299

    jwg299 jusluv2fish

    well Reel Lady, it sort of works like this: because they are a business they have to file either chapter 7 or chapter 11; the difference is chapter 7 nobody gets paid and the company goes out of business at least for 10 yrs, with chapter 11 they have to list everyone they owe money to when the bankrupacy is filed. now based on if they are going to stay in business they repay who they owe back based on a monthly amount to be paid to a trustee over their case and the trustee pays out the money usually to whoever they owe the most money to first and works his way down to the smallest debt. if they will be going out of business, again they can start up again for 10yrs but in this case a good portion of their assests and on hand money that is in the businesses account will be divided up amoung all the folks they owe.

    so depending on where you guys fall into their debt lineup you may be paid towards the begining or the end of their bankrupacy

    remember it goes from who they owe the most to who they owe the least.
  16. H2O Mellon

    H2O Mellon Hangin' With My Gnomies

    I agree w/ Jitterbug, it was probally a Chapter 7 since it' so close to October, which is when the new BK laws go in affect.

    I know we're all real quick to get defensive, but the company that filed has been hurt too, of corse Reel Ladys company is going to be hurt by this, but in business BK's everyone involved gets hurt where as some personal BK cases people come out smelling like a rose. :rolleyes:
  17. You really should just hire a bankruptcy lawyer. They know all the procedures and such.

    Good Luck.
  18. Due to the business im in we are alawys looking for a website that has BK papers on it. It is public information however the only way we have ever been able to obtain it is by going to the courthouse. there are some sites that you have to pay to get the paperwork, but i have personally never done that.
  19. Sorry to hear this for you guys. I have two customers that are claiming bankruptcy. I know how you fill. Good luck.
  20. Hate to see Small business go under.....I am Small business