• 11th Circuit Decision Creates Uncertainty For Trade Creditors Selling Goods and Services To Customers in Bankruptcy
  • April 1, 2010 | Authors: Stephen L. Fink; William M. McErlean; Patrick E. Mears; Deborah L. Thorne; Michael B. Watkins
  • Law Firms: Barnes & Thornburg LLP - Fort Wayne Office ; Barnes & Thornburg LLP - Chicago Office ; Barnes & Thornburg LLP - Grand Rapids Office ; Barnes & Thornburg LLP - Chicago Office ; Barnes & Thornburg LLP - South Bend Office
  • Trade creditors take note: even though Chapter 11 debtors may continue purchasing goods and services and may continue operating in the ordinary course of their business, an earned cash payment in the creditor’s hands may not be safe from recovery. Moreover if you are a party to a supply contract and under an obligation to continue to furnish goods or services, the payments you receive may be recoverable by a subsequently appointed trustee. The 11th Circuit recently upheld a bankruptcy court ruling that a post-petition trade vendor was required to return $1.9 million in postpetition payments that the vendor had received from the bankruptcy debtor in the ordinary course of business.