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?


Asked on 2/01/06, 1:39 pm

1 Answer from Attorneys
Nate Bernstein Nate Bernstein & Associates, Attorneys and Counselors at Law

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.

This is a preliminary answer, you can contact us for additional research or information. Thank you.

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Answered on 2/01/06, 3:39 pm


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