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WALLSTREETESQ
WALLSTREETESQ, Attorney
Category: Bankruptcy Law
Satisfied Customers: 17080
Experience:  14 years exp., CH 7 AND 13 Bankruptcy cases, AFL-CIO UNION PLUS, UFT NYSID AND ALL MAJOR UNIONS
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I was doing business with a company that just filled chapter

Customer Question

I was doing business with a company that just filled chapter 11 , and was paid a significant amount 30 days before they filled chapter 11, do we have to give them the money back? and did ship them goods a few days prior to the chapter 11 as well.
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  WALLSTREETESQ replied 5 years ago.

WALLSTREETESQ :

Hello I am a licensed attorney here to help you with your question, please review my response and do not hesitate to ask for clarificati on.

WALLSTREETESQ :

Have you received any notice from the Court?

WALLSTREETESQ :

A debtor cannot make a preferential payment to a credito. Preferences are payments made by the debtor to its creditors on the eve of bankruptcy that are subject to recovery during the bankruptcy case. Preferential payments are often made without any improper motive, but they nonetheless are recoverable because they favor one creditor over another.

WALLSTREETESQ :

You are not a creditor. but a service provider, and since you provided goods to the debtor, a good argument can be made that you were paid for services, and their was no preferential payment.

WALLSTREETESQ :

Anytime a debtor is in a chapter 11, their recent transactions will be examined and thier is a possibility that you may have to return some of the money, however you are allowed to challenge any claim they make, and you should

JACUSTOMER-8vr3klso- :

but if we do challenge them in regards to giving the money back, it is still up the Delaware court to rule if we have to give them back the money that was paid prior to the filing of chapter 11?

WALLSTREETESQ :

It would be up to the Bankruptcy Court to order you to return the money, you would have to be noticed and sued by the Creditors or Bankruptcy court.