Bankruptcy Relief for Creditors
In 2005, the Bankruptcy Code was amended to add §503(b)(9) as a protection for creditors who deliver goods (as opposed to services) to a debtor within 20 days prior to the debtor filing bankruptcy. If the goods are not paid for, the supplier is entitled to an administrative priority claim. The importance of getting an administrative priority claim is that, in a Chapter 11 reorganization case, these claims must be paid in full in order for the plan of reorganization to be confirmed. In addition, a creditor can file a motion with the bankruptcy court to request the immediate payment of administrative priority claims. Debtors now routinely request that the bankruptcy court set an early “bar date” for submitting §503(b)(9) administrative claims. Claims not submitted to the court prior to the bar date are disallowed. So the point is, if you have supplied goods to a business that files bankruptcy within 20 days after they are delivered, pay attention to notices you receive from the bankruptcy court so that you do not miss the deadline for filing your Proof of Claim. If you would like to receive more information on this topic, please contact Chuck Meyer at cmm@santen-hughes.com