Bankruptcy Law Questions? Ask a Bankruptcy Lawyer Now.
I am a bankruptcy attorney and I would be happy to assist you. A Chapter 11 is different than other types of bankruptcy, since it allows a debtor to continue their company operations while in bankruptcy. Despite this fact, a bankruptcy stay is now in place. This means that you can not attempt to collect on a pre-petition debt (the $14,000). Typically, a judge does not want to see a company incur any more debt while in bankruptcy. So for the short term, you should halt work and talk to the attorney who is representing the debtor to see how they plan to handle the future work to be performed. Since I can not review your contract for services with the debtor on here, I recommend you hire a Chapter 11 attorney who can advise you on the contract's specific terms and effects in the debtor's bankruptcy. (A great place to start is by contacting you local NC state bar lawyer referral service. They usually have a list of attorneys who are pre-approved and provide free or discounted initial consultations.) You may be able to prepare (with the help of an attorney) a reaffirmation agreement. Ask if this is an option when you meet with the attorney. This can require that the debtor pay you back the $14,000, in order for you to do future work, essentially reaffirming the original contract and making your debt non-dischargeable. Once the debtor agrees and signs, it will still need to be approved via motion (and hearing) by the judge. This is why you will need a local attorney to handle this for you. Also, you may have construction liens which could be considered secured debts and give your debt priority in the debtor's bankruptcy, but again you should ask a Chapter 11 attorney in your area this question after they look at your original agreement. The answer will also depend on what other debts the debtor has listed. Just remember to ask the question "do I have any priority?" Although you need to retain an attorney soon to review your contract, if the creditor's meeting is coming up make sure you attend. You don't want to miss this. It is where the debtor and its attorney will talk about how they plan to deal with their debts and restructure their business. You will also be able to ask the debtor questions at that time. It is typically a month after they file bankruptcy and you should have received the notice with the date, time and location in the mail. If you can't meet with an attorney before, don't miss this. You may also receive a notice to file a proof of claim. Don't miss this deadline either, but you may want to talk to an attorney about which box to check with regards XXXXX XXXXX and priority of your claim after the attorney reviews your contract. When you file the proof of claim, don't forget to attach any paperwork that gives you a right to be repaid (ex- the original contract, invoices, receipts, etc.). I hope my answer has assisted you and that you will leave me a positive rating! Feel free to ask for me by name in the future if you have any other questions.
Greetings Elizabeth, I understand that once a Bankruptcy stay is in place that I cannot pursue the payment of the $14,000 of pre-petition invoices, but is there any chance that they will be paying it anyway? <she asked hopefully> I am an "unsecured creditor" with no collateral, and no ability to place liens. Isn't that the lowest of the low, when it comes to priorty for payment? They have to wipe 4 billion off of their balance sheet...what are my odds of getting anything? <you can answer *after* you stop laughing.>The Creditors 341 Meeting is on September 9th, but I am meeting with a local bankruptcy attorney tomorrow to review the language of the contracts. I will seek their advice on the possibility of a "reaffirmation agreement"--a brilliant suggestion on your part.Is the Creditors 341 Meeting where they determine how to handle future work to be performed? Future work on the mid-stream contracts is absolutely the most urgent issue, because my clients are pressuring me (today) to move ahead with work, and I don't know what to tell them. I will not be working with them in the future. Should I tell them they must wait for the results of the Creditors Meeting before we proceed? If they don't like that answer, can they sue me for breach because I have failed to act as if "time is of the essence" on their project? What are the implications of breaching a contract?I'll try to make these my last questions--I don't want to tie you up forever. You've already been very helpful. Thanks,Irene Morris
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