Business That Owes You Just Filed Bankruptcy? Top 5 Things Creditors Should Do Next

When a business customer files for bankruptcy, it can feel like the door to getting paid has slammed shut, but it hasn’t. Creditors still have rights, and recovery is possible with the right strategy.

 

Bankruptcy doesn’t erase every debt, and it doesn’t mean you’re out of options. What it does mean is that creditors must act quickly, avoid common missteps, and follow a new set of rules. At Dunn Law, P.A., we help business-to-business creditors pivot from traditional collections to strategic bankruptcy participation that protects their interests and increases the likelihood of recovery.

 

Here are five practical steps every commercial creditor should take when a customer files for bankruptcy.

 

1. Respect the Automatic Stay Immediately

The moment a bankruptcy petition is filed, the automatic stay takes effect, prohibiting nearly all collection activity, including:

• Phone calls and demand letters
• Lawsuits and judgment enforcement
• Repossessions or service shutdowns intended to pressure payment
• Setoffs or credits applied without legal advice

Violating the stay can result in serious legal consequences, including court sanctions, attorneys’ fees, and, in some cases, punitive damages. Business creditors are expected to know these rules and act accordingly.

 

Immediately stop all collection efforts and consult counsel to evaluate your rights. In some cases, especially where collateral is at risk, it may be appropriate to seek relief from the stay. Dunn Law advises creditors on when and how to take that step without jeopardizing their position.

 

2. Understand the Type of Bankruptcy Filed

Not all bankruptcies follow the same playbook. Understanding what chapter the debtor filed under helps shape your recovery expectations:

• Chapter 7 - The company is winding down, and a trustee liquidates assets. Unsecured creditors often recover little, if anything.
• Chapter 11 - The business aims to reorganize and continue operations. Creditors may have a role in voting on the plan and negotiating treatment.
• Subchapter V - A streamlined form of Chapter 11 for small businesses. It’s a more debtor-driven process, with faster timelines and streamlined committee and plan procedures for creditors.

Knowing the chapter can help you decide whether to take a passive, monitoring role or a more engaged approach. Dunn Law quickly reviews bankruptcy petitions, schedules, and first-day filings to help creditors assess the road ahead.

 

3. Move Quickly to Preserve and Assert Your Claim

Bankruptcy cases run on tight deadlines, especially when it comes to filing your proof of claim. Missing the bar date can permanently bar you from sharing in any distribution.

 

As soon as you receive notice of the bankruptcy:

• Read the court notice carefully for the bar date, case number, and court location
• Gather your documentation, including contracts, invoices, account statements, and email correspondence
• Prepare a timely proof of claim, identifying secured or priority portions if applicable

Also, check how the debtor has scheduled your claim. If it’s marked as disputed, contingent, or unliquidated, you may need to defend your rights. Dunn Law helps business creditors file accurate claims, maximize recoveries, and respond to challenges from debtors or trustees.

 

4. Evaluate Security Interests and Special Creditor Rights

One of the first questions to ask is whether your claim is secured or unsecured. That answer can significantly impact your recovery.

• Do you have a perfected security interest in goods, inventory, equipment, or receivables?
• Is there a personal guarantee or letter of credit backing the obligation?
• Do you have mutual obligations with the debtor that might support setoff or recoupment?

For suppliers of goods, additional rights may apply:

• Reclamation rights (for goods shipped shortly before the bankruptcy)
• 20-day administrative expense claims under Section 503(b)(9) for certain deliveries made just prior to the filing

These tools are powerful but complex, and their success depends on timing and proper legal positioning. Dunn Law assists clients in evaluating liens, setoff rights, and administrative claim strategies with the goal of enhancing priority and increasing recovery.

 

5. Choose How Involved You Want to Be

Not every creditor needs to be highly active in a bankruptcy case, but some should be. Your level of involvement should reflect:

• The size of your claim
• The importance of the customer relationship
• The expected return from participating more actively

There’s a wide range of possible engagement:

• Passive - File a proof of claim and monitor notices
• Moderate - Vote on the plan, respond to preference demands, object to unfair treatment
• Active - Seek to serve on a creditors’ committee (if eligible), negotiate critical vendor terms, or litigate claim objections and contract disputes

Dunn Law helps business creditors calibrate their involvement to maximize effectiveness, whether that means taking a back seat or leading negotiations.

 

Partnering with Dunn Law: Strategic, Ethical Commercial Collections

When a customer files for bankruptcy, getting paid requires a new approach. Dunn Law, P.A. works with commercial creditors across Florida to assert their rights, avoid common missteps, and maximize recoveries.

 

We help B2B clients:

• Assess the impact of the automatic stay and evaluate stay relief options
• Review court filings and estimate likely recoveries
• Prepare and defend proofs of claim, including secured and priority analysis
• Review lien perfection and potential setoff or recoupment rights
• Advise on reclamation, administrative claims, and critical vendor strategies
• Monitor cases and represent creditors in committees, plan negotiations, or preference litigation

Bankruptcy doesn’t mean the end of the road. It just means the rules have changed.

 

Contact Dunn Law, P.A. today to protect your rights and pursue what you’re owed, ethically and effectively.