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I'm a business owner that has a customer that filed Chapter…

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I'm a business owner...

I'm a business owner that has a customer that filed Chapter 11 in May 2016. Most of the debt they accumulated came post BK filing. After seeing the amount they owed to secured creditors from the BK courts, we felt it was in our best interest to turn the amount owed to us into a "note" and have them repay us over time. We never filed an administrative claim. Now they have defaulted on several "note" payments and are out of terms on two invoices we gave them shorter than usual terms on. We are owed roughly $630,000. I'm looking for some guidance as it seems everyone is all over the board as to what my next step should be

Lawyer's Assistant: What state are you in? And has anything been officially filed?

We are located in Illinois. Our customer is in Kentucky. And we have not filed an administrative claim ourselves

Lawyer's Assistant: Has anything been filed in civil court? If so, what?

Civil court? No

Lawyer's Assistant: Anything else you want the lawyer to know before I connect you?

They did receive debtor in possession financing in the amount of 250k

Submitted: 2 months ago.Category: Legal
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Answered in 5 minutes by:
12/15/2017
Lawyer: DrakeLAW, Lawyer replied 2 months ago
DrakeLAW
DrakeLAW, Lawyer
Category: Legal
Satisfied Customers: 1,037
Experience: Attorney
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Hi, my name is ***** ***** I look forward to helping you, please give me a moment to review and possibly research answers to your question.

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Lawyer: DrakeLAW, Lawyer replied 2 months ago

So you did a post-petition note with them?

Was that post-petition note approved by the BK court?

Has a plan been confirmed?

Is your obligation treated in the plan?

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Customer reply replied 2 months ago
The note was between us and the customer. and we have signed documents from them and us. I have never seen any updated documents from the courts confirming the note between us and the customer but there were weekly payments being made in the amount of $3000 that the trustee's have seen.
Lawyer: DrakeLAW, Lawyer replied 2 months ago

Alright, new debts are supposed to be approved by the BK court. But ignoring that for now. Do you know the status of the Plan? That document will drive the bus.

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Customer reply replied 2 months ago
There's not a lot of clearity when it comes to the status of the plan as there is a disputed administrative claim. But the trustee has taken the side of my customer and are fighting the claim as well.
Lawyer: DrakeLAW, Lawyer replied 2 months ago

Well, all the documents are publicly available so the status of the plan can be easily ascertained. Furthermore, the attorney for the debtor has a fiduciary duty to creditors and should be helpful in getting information or documents.

You say the trustee, do you mean the US Trustee or has a trustee been appointed to run the debtor?

Is there any reason you have not filed a Proof of Claim for an Admin claim yet? What is the trustee's argument?

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Customer reply replied 2 months ago
We didn't want to file an administrative claim because we're of the mindset it will force them into 7 which is why we agreed to the "note." There has been no argument with the trustee (appointed not US trustee) with us as we haven't filed a claim. But the recent non-payments and being out of terms with two invoices and the note repayment is making us reconsider. Again, we're just worried our claim will put them straight into 7. And at the end of the day, getting something from them is better than nothing at all. But again, our debt owed is primarily post filing debt
Lawyer: DrakeLAW, Lawyer replied 2 months ago

Alright, I am with you. Why do you think the administrative claim will force them to a 7?

As the holder of an admin claim, you are allowed to accept different terms of repayment. That is, normally all admin claims must be paid in full by the duration of the Plan, but you can agree to accept other terms.

Seems to me that you guys need to file an admin claim. Happy to discuss this further.

Please kindly rate the question so I may be credited. Thank you. You can still ask follow-up questions.

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Lawyer: DrakeLAW, Lawyer replied 2 months ago

Was I able to answer your question?

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Customer reply replied 2 months ago
Gives us a base
Lawyer: DrakeLAW, Lawyer replied 2 months ago

Ok, well please do let me know if I can be any further assistance on that and best luck with getting it resolved.

Please kindly rate the question so I may be credited. Thank you. You can still ask follow-up questions.

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