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Collecting Bankrupt funds?

Discussion in 'Business Operations' started by Bunton Guy, Jun 16, 2007.

  1. Bunton Guy

    Bunton Guy LawnSite Bronze Member
    Posts: 1,755

    We have done years of maintenance for a large commercial firm that about a year ago filled bankruptcy. Right when they had filled they fell 2 months behind on their maintenance bills. Which all of those funds fell into the bankruptcy
    $5,710.96 Roughly early May we got a notice from some agency in NY NY that was settling these debts. They gave us a ballot to vote on whether we accept or reject the amended plan...not to sure what the "plan" was as it was all legal mumbo jumbo and we don't have a lawyer (I know we need one).

    We just got another letter in the mail that was another ballot to vote on for our voting amount of $5,710.96. Im curious if anyone has dealt with this kind of issue and just how many times we will have to deal with this junk before we get SOME kind of money back?

    From what I was told by one of their local executives was that the company was bought out last week and the closing was this week. Something to the effect of these issues had to be taken care of within 45 days of the closing or they would not get paid on. Kinda makes me wonder if we are doing things right? I would like the surprise of just seeing a check show up unexpected in the mail but it by the looks of it they are just jerking us around with these voting ballets?:hammerhead:
  2. carcrz

    carcrz LawnSite Silver Member
    Posts: 2,085

    If the new owners keep the name, they are responsible for all debts of the previous owner.
  3. Bill S

    Bill S LawnSite Member
    Posts: 184

    For a company to emerge from bankruptcy protection they must have a plan in place, agreed on by creditors and approved by the courts. This plan is usually paying cents on the dollar to settle old debt. Your vote was to approve the plan where you will receive cents on the dollar or reject the plan and make them go back and come up with a different resolution.

    The small guy will usually get hurt at this point because the large corporations that are creditors want to recoup something and will usually settle so that they don't risk losing everything.

    Now, once a company enters bankruptcy protection, I believe they are liable for all new debts incurred though you will definitely want to double check that.

    Even with "major corporations", as well as residential accounts, set a credit limit that you are comfortable floating to these individuals, once the limit is met, no more work will be done until payment is made. It is to protect your bottom line. Most of us can't afford to lose a few grand from any one account.
  4. Bunton Guy

    Bunton Guy LawnSite Bronze Member
    Posts: 1,755

    Since they went into bankruptcy protection...they have paid on the dot every 30 days.

    When I received the first voting ballot it had a spot to enter what amount I agree to vote for. I had put the full amount in there. Now like I had said earlier I have received another voting ballot. This time there is another blank area but there is also a area above it with the printed amount that I had hand written in the last time (the full amount due) maybe they are trying to settle for the full amount? seeing that we are THE smallest debt they have? most of their debts are well over 1 million dollars ++ into the hundreds of millions.
    The amount of debt they had to settle was nearly 200 million or there about and we were close to the last few to be settled.

    From what I have heard they are going to be operating under there old name and new name. They have operated under nearly a dozen names as they have many entities to the company.

    I didn't notice in either of these two voting ballots that there was an amount that said " This is what WE agree to pay YOU" am I overlooking something? maybe another legal word to this ?
  5. would that be Tower automotive by any chance ?
  6. topsites

    topsites LawnSite Fanatic
    Posts: 21,653

    This is bankruptcy we're talking about and not some kind of re-financing, right?
    No doubt getting a check would be nice, but me thinks this is wishful thinking.

    Last I heard when someone declares bankruptcy it means they have NO money and ALL their debts are wiped out.
    There exists the option of contesting a debt, I am sure of this, but you have to do some legwork and if you're only half thinking of contacting an attorney, then your money is halfway in the grave and falling fast. So either do something about it, or write it off, simply put.

    Even after you contact an attorney, the chance of you getting any money is slim, to none.
    In most bankruptcy cases you're not the only creditor, and you may be the smallest one but go tell that to the guy they owe 3 million to, see what he thinks about you getting paid, so to speak. In most cases, if any money is left, it is divided up between ALL creditors, no one takes front of the line and takes all, so to speak.

    I'm not sure about this voting bit, but I suspect it has to do with whether or not you agree with the debt and how it is to be resolved, or not. So if you vote yes, I think nothing more comes of it.

    I suspect, if you vote NO, then you can show up in court to fight it, but chances are slim and it is unusual, most creditors never show in court during bankruptcy proceedings. It's mostly administrative anyhow, and to fight it you need to prove that they have the money (or at the very least raise the doubt), so if you see the company buying up a bunch of brand new equipment and spending money like there's no tomorrow, then you stand a chance, but you have to contest it, in court. Now if you are the only one who shows up to raise contest, I THINK you may get paid first, but I don't guarantee it.

    Thou I could have it backwards and I could be totally wrong, it could be the other way around or nothing to do with the above at all, but one thing I am pretty sure of is you need to contact an attorney or you can write that money off... At the very least, call and ask some questions, see what they have to say.
  7. Bunton Guy

    Bunton Guy LawnSite Bronze Member
    Posts: 1,755

    The first settlement we had was for a flower instillation in 6 or so flower pots. The bill was $1,200 and some change and we agreed to settle for $400.00

    That actually happened within 2-3 months of them filling chapter 11. So I guess when you get higher up in the money figures it takes longer. From what the chief accountant said was that the new owners couldn't fully take over the business until all of the past debts were taking care of.

    Naturally they will pay pennies on the dollar. I am pretty confident we will get something out of them just not sure how much. I was more concerned with how many times they will send me voting ballots.

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