Legal Question in Bankruptcy in Pennsylvania

What are my rights as a creditor in bankruptcy proceeding?

I own a company that designs and manufactures lighting fixtures in Rhode Island. Last month I placed an order for materials from a steel company in PA and paid $9000 in advance (as is customary in this industry). Two weeks later we received notice that the steel company filed for bankruptcy, that they would not be filling our order, AND would not be refunding our money. What do I have to do to ensure that I get my money back?


Asked on 4/01/09, 2:11 pm

1 Answer from Attorneys
Jules D'Alessandro D'Alessandro & Wright

Re: What are my rights as a creditor in bankruptcy proceeding?

Sadly you may or may not get any money back. You must file a proof of claim ("POC") in the bankruptcy. If you want to be proactive you can look up the bankruptcy petition and file your POC before one is sent to you. Thereafter you will become an unsecured non-priority creditor and share pro-rata in any funds from the liquidation of the company if it is a chapter 7 filing. If it is a chapter 11, which is a reorganization, and filling your order is in the financial best interest of the company then you may receive your material. You may also try an adversarial proceeding against the company alleging that the "debt" incurred with you was done "in contemplation of bankruptcy" and is therefore non-dischargeable. However, the cost of pursuing this may exceed the $9,000.00 that you are out. i.e. throwing good money after bad. If you need help finding the petition, obtaining and completing a POC, please feel free to contact me.

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Answered on 4/01/09, 2:31 pm


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