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TexLaw
TexLaw, Attorney
Category: Legal
Satisfied Customers: 4196
Experience:  Lead trial/International commercial attorney licensed 11 yrs
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If a small printitng company has filed bankruptcy and was paid

Resolved Question:

If a small printitng company has filed bankruptcy and was paid in full to print 500,000 brochures but only delivered 365,000 what is the probability of winning or losing the case? The business sought bankruptcy protection after the invoice was paid in full but before the brochures were printed and delivered.
Submitted: 2 years ago.
Category: Legal
Expert:  TexLaw replied 2 years ago.

Zachary D. Norris :

Hi

Zachary D. Norris :

I'm happy to answer your question.

Zachary D. Norris :

Bankruptcy causes what is called an "Automatic Stay" on all claims.

Zachary D. Norris :

This means that the customer who did not receive what they paid for would have to file a "breach of contract" claim with the federal bankruptcy court and would have to establish their claim as valid by proving their case before being able to obtain a recovery.

Zachary D. Norris :

Nevertheless, it would still go through the bankruptcy proceedings, and this means that even if they establish their claim, they get in line with the other creditors and will be paid according to the bankruptcy court's order.

Zachary D. Norris :

Do this answer your question?

Zachary D. Norris :

Since it seems you have stepped away, I'm going to switch over to Q&A format. If you need further information or would like to talk more, please let me know.

Expert:  TexLaw replied 2 years ago.
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Expert:  TexLaw replied 2 years ago.
The likelihood of the customer being able to establish the claim all depends on whether they want to go through the hassle of doing the proceeding in the bankruptcy court. However, they do have a valid claim.

Let me know if you need further information or have follow up questions.

Thanks,
Zachary D. Norris
Customer: replied 2 years ago.
If the company filied Chapter 11 and is still in business can you file suit for the remaing brochures, to atleast get the rest of the order
Expert:  TexLaw replied 2 years ago.
You can file the request for an injunctive order from the bankruptcy court, but you cannot file a state injunctive claim. The likelihood of success in getting the bankruptcy court to grant your request for injunctive relief depends on the number of claims. Further, it would be a long process. It is more likely that you will get relief by filing a claim for damages rather than seeking an injunctive order from the court to tell the company to print the rest of the brochures.
Customer: replied 2 years ago.
if the payment of 150,000 was paid and the company only delivered 109,500 worth of merchandise, would it be a case a lawyer would want to handle. And about how much would lawyer fees and other litigation cost? Would the law firm have any long term effects of their reputation for taking a case like this one?
Expert:  TexLaw replied 2 years ago.
Hi. This would be a case that a lawyer would want to handle. I cannot provide you with any indication of what the fees would be. You would likely be able to find a lawyer to represent you based on a hourly fee basis (somewhere between $200 and $350 per hour), or you might be able to find a lawyer to take the case on contingency. There would not be any reputational risk on a case like this.
Customer: replied 2 years ago.
So the only steps would be to file a breach of contract and wait in line with other creditors even though the company sought bankruptcy protection after the money had been paid to them and they are still in business. The amount of merchandise missing is around 40,500 would that be paid back or will more be paid back being it took lawyers court and time or will banruptcy cover it and nothing be done about the breach of contract
Expert:  TexLaw replied 2 years ago.
There is no way of telling whether you could recover the full amount of the claim, or whether you would be able to recovery anything for attorneys fees. The fact that the company is in bankruptcy and is seeking protection means that your debt will be structured along with the rest of the creditors through the bankruptcy. This could result in a lesser payment than the full claim.
Customer: replied 2 years ago.
Where would the money come from if the company is in bankruptcy
Expert:  TexLaw replied 2 years ago.
Bankruptcy only means that the company has more debts than it is able to pay (allegedly...the company must prove this in court). Thus, the money comes from the company. For example, if the company only has $150K per month in revenue, but owes $1M in debts, the bankruptcy court will look at the debts and structure a payment plan. Since it is a Chapter 11 bankruptcy, the likelihood of the claim being reduced in value is lesser than in a Chapter 7. Essentially, the Court would structure a payment plan for the claim. As the claim is several thousand dollars, I think it is a good claim to pursue and encourage you to do so.
TexLaw, Attorney
Category: Legal
Satisfied Customers: 4196
Experience: Lead trial/International commercial attorney licensed 11 yrs
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