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Re: Selling products/collecting payment from a company that filed Chapter 11

Asked over 2 years ago - Mesquite, TX
Bankruptcy Chapter 11 Bankruptcy Debt Collection Filing for Bankruptcy

We have a customer that filed Chapter 11 and owes past due funds. The customer placed a current order that was fulfilled by a CSR without knowledge of this, and therefore it was not done as CoD. We are not under contract to this company. Should we expect full payment on the current transaction, or will it simply be lumped in with the past-due?

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Reputation Level 5
Answered over 2 years ago. Bankruptcy Attorney in Houston, TX.
Generally, a chapter 11 debtor has an obligation to pay its post-petition obligations as they come due in the ordinary course of business. If the Debtor fails to pay for post-petition goods or services, the creditor can seek allowance and payment of a chapter 11 administrative expense for the goods provided post-petition. An administrative claim has priority over general unsecured claims. Whether the claim will ultimately be paid will depend on numerous factors in the chapter 11 case.
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