The credit professional knows well that a customer’s Chapter 11 filing means long delays before receiving any payment on the prepetition account - and that payment is usually but a fraction of the claim. Traditionally, the creditor would file a proof of claim, perhaps serve on the creditors’ committee, and press for a meaningful payment.
However, the credit professional has found that customers filing Chapter 11 may still provide an opportunity for sales especially if the vendor has had a substantial prepetition trade relationship. Consequently, the credit professional, wearing the hat of relationship builder and working ever closer with sales, may try and find a way to continue to sell the customer in Chapter 11—even credit sales.
This paper discusses the ways that the new Bankruptcy Act can work in your favor in continuing to do business with your customer in Chapter 11.