There is no question that a bankruptcy filing can frustrate your attempt to collect on a debt from another business in Massachusetts. You should not give up, though. You may still receive some payment through bankruptcy, even if you cannot collect on the entire amount the business owes you. At Law Offices of Alan M. Cohen LLC, we use several methods to pursue these debts.
Filing your proof of claim
Once you receive notice that your debtor has declared bankruptcy, you should review the paperwork and your status as a listed creditor. You should also have the chance to attend a meeting with the debtor to ask questions regarding the bankruptcy filing. This review process should give you a good idea of how the bankruptcy is likely to proceed and your ability to recover your debt.
In order to maintain youur debt as part of the bankruptcy, you must file proof of the debtor’s obligation to you. Although the claim document is relatively short, you must include all relevant documentation with the claim. We highly recommend you have an experienced collections attorney like those at Law Offices of Alan M. Cohen LLC assist you with your bankruptcy filings, as the process can be complicated.
Restructuring the debt
Many businesses file for Chapter 11, which allows them to restructure their debt but keep their business functioning.. The court may receive multiple repayment plans, in which case you can vote on the plan you prefer. The debtor usually has three to five years to pay off the debt through the repayment plan.
Unfortunately, some businesses cannot keep their doors open and either file or convert to a Chapter 7 bankruptcy, which liquidates all the assets and closes the business. In that case, the bankruptcy trustee will distribute the assets in an order of priority and you may receive a payment, or you may not.
What about preference actions?
Preference actions happen when a business debtor pays a creditor within 90 days of filing for bankruptcy. If a debtor pays you within this window, the bankruptcy trustee could bring a preference action against you, claiming that the payment was preferential or even fraudulent. The court could force you to return the payment.
Let a skilled commercial debt collection lawyer help you
The experienced commercial collection lawyers at Law Offices of Alan M. Cohen LLC have handled many preference actions and understand how to defend against and negotiate these claims. We have a strong track record of success. No matter what type of commercial collection matter you face, we can help. Contact us today by calling 508-620-6900 or sending us an email.