Legal Question in Bankruptcy in California
Small Business Credit Sales When Vendor files Chapter 11
I'm the owner of a small business and one of my major vendors has just filed a Chapter 11. The vendor has asked to continue business with us through credit sales. How can my business be secured for the credit sales and should I accept credit sales in light of the pending Chapter 11? If the vendor intends to return product pre-bankruptcy, by law can they do that?
1 Answer from Attorneys
Re: Small Business Credit Sales When Vendor files Chapter 11
They should get bankruptcy court permission to incur more credit. You can file a claim in the bankruptcy court for pre=petition arrears. Don't let them return the product if it is not defective, and beyond your normal return time. Be cautious, as they may not survive Chapter 11.
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