Get Paid When a Customer Goes Bankrupt

Despite the common belief that creditors only recover pennies on the dollar in bankruptcy cases, several effective strategies, from reclaiming recently shipped goods to leveraging critical vendor status, can help creditors recover significantly more money from bankrupt customers if they know their rights and act quickly.

BANKRUPTCY

1/8/20252 min read

Customer Bankruptcy
Customer Bankruptcy

Don't Give Up: You Can Get Paid When a Customer Goes Bankrupt

Here's a startling fact: Business bankruptcies shot up by 33.5% in the year ending September 2024. If you're a creditor, you might think this means kissing your money goodbye. After all, everyone "knows" you only get pennies on the dollar when a customer files for bankruptcy, right?

Well, here's the good news: You might be able to recover a lot more than you think. Let me share some insider tips that most companies don't know about.

Recently Shipped Goods? You're in Luck!

Did you ship goods within 20 days before they filed for bankruptcy? You could get paid in full. The same goes for anything delivered after they filed. The catch? You need to file the right paperwork with the bankruptcy court. Your customer won't volunteer this information – you need to speak up!

Quick Action Can Save Your Goods

Ever heard of a reclamation notice? It's like a "take-backsies" in the business world. If you act fast, you can either get your goods back or get paid in full. Even better – if your goods are still in transit, you can stop them. Usually, the company will pay you in full to get those goods moving again.

Special Situations That Work in Your Favor

Are you a critical vendor? Think about it – if they can't run their business without your products, you've got leverage. Foreign vendor? Even better! U.S. bankruptcy courts don't have the same grip on international companies.

Smart Moves to Protect Yourself

  • Got a security interest in your contract? That's like having insurance – it puts you at the front of the line for payment.

  • Strategic about your shipments? Smart! Just make sure you're following bankruptcy stay rules.

  • At the very least, file that proof of claim. It's like buying a lottery ticket – you can't win if you don't play.

Here's the bottom line: Don't assume you're out of luck just because a customer filed for bankruptcy. There are plenty of ways to get paid – you just need to know your rights and speak up for yourself. The money is often there; you just need to know how to get it.