What to do if I just found out that a company that we do a lot of subcontracting for has filed Chapter 11 and they currently owe us $40,000?
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What to do if I just found out that a company that we do a lot of subcontracting for has filed Chapter 11 and they currently owe us $40,000?
Do they still have to pay us even if they file Chapter 11?
Asked on January 21, 2013 under Bankruptcy Law, Wisconsin
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 11 years ago | Contributor
Unfortunately, the money they owe you is almost certainly a general unesecured debt; unsecured debts may be discharged in bankruptcy. While there is a reasonable chance that the chapter 11 plan will see you receive something--maybe pennies or nickles, or if you're really lucky, dimes on the dollar--it is highly likely that the amount they owe you will at least be reduced in bankruptcy, and could potentially be wiped out entirely. Work done as a subcontractor is not entitled to any protection or preference in bankruptcy.
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