We have been discussing preferential payments, defenses and avoidance tactics. But what businesses care about most is getting paid for goods and services provided. This entry will discuss how to collect from a customer who has declared bankruptcy.

We previously dissussed what preferences are and some common defenses. Many small businesses may be wondering if there is any way to get paid what is owed, but at the same time avoid claims of preferential payment. Unfortunately, there is no absolute, “slam dunk” way to avoid a bankruptcy preference claim risk.

Previously, we discussed preferential payments — payments made to an insolvent company within 90 days of the bankruptcy filing. To more equitable or fairly divide the limited assets among the creditors, these payments must be returned to the debtor. Your first question upon receiving a preference demand letter is likely to be: Do I have [...]

Word on the street is that Tarheel Dominion Company, a pretty large customer of yours, is in a cash crunch. You are, however, relieved when you receive timely payment of $100,000 for services you rendered to Tarheel Dominion, and the check clears. Two months later, you hear that Tarheel Dominion has filed for Chapter 11 [...]