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Your customer files bankruptcy: a checklist of what to do.(TRADELINE)
Just when you begin to think all is right with the world, you are told that one of your customers has filed for bankruptcy. Here is a checklist of some actions you should take immediately and others you should consider taking to help protect your company's interests.
Actions You Should Take Immediately
1. Stop all collection efforts.
Immediately notify any collection agencies or attorneys you had retained to pursue payment from the customer of the bankruptcy. Tell them to stop any collections efforts on your behalf. When the bankruptcy is filed, the "automatic stay" goes into effect, which prohibits most collection actions against your customer and its property.
2. Investigate whether any shipments of goods that are in process or in transit can be immediately stopped.
When you discover your customer's bankruptcy, you may have the right to refuse to make delivery unless you are paid in cash. However, keep in mind that if your contract requires you to supply goods or services on an ongoing basis, you might be required to honor those terms even though your customer is in bankruptcy.
3. Immediately make a demand for reclamation of any product already in the hands of the insolvent buyer.
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