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Jun 01 2017
A New Chapter in Bankruptcy
Shane Norman, CCE, Wheeler Machinery

I'm not sure why, but Monday's can be interesting to say the least. I had one of those Monday's a few weeks back. I received a noticed that a customer of ours had filed for bankruptcy first thing that Monday morning. Upon digging into the implications for our company (how much was I going to possibly need to write off), I found we had just closed an engine rebuild exactly one week prior (major $$'s.) Digging deeper, I found that we had two more engines in the process of similar rebuilds. Yikes!!! What to do . . . What to do. Since I teach about the implications of bankruptcy and all the formalities, you'd think I would know what to do. Except this time, it was a Chapter 15 bankruptcy. 

A Chapter 15 is essentially where a company has filed either bankruptcy or some type of reorganization paperwork overseas and the company would like to extend whatever the foreign courts approve to be effectuated here domestically. Needless to say, I'm not proficient with Australian Bankruptcies nor their alternate work-out arrangements, so I was in the dark on this one. I was faced with a decision; was I going to get paid on the invoice closed last week and should I stop the present work in progress to avoid further losses? Worse yet, the company representatives were touting it wasn't really a bankruptcy, that they needed their engines asap, and they were emphatically stating all invoices, pre and post filing date were going to be paid. I was pretty sure that none of the customer's employees knew much about bankruptcy, much less a Chapter 15, so I was struggling to rely on what they were telling me.

I wanted to reach out to my regular attorney's but I knew they wouldn't have much experience with this either; they would have to make a bunch of phone calls and do some extensive research to get us some type of recommendation, and I didn't have the time for that. Meanwhile, other vendors were reopening the customer as they were buying the line (this isn't really a bankruptcy) and I didn't want to be "that" vendor. I also didn't want to add more $$ to our potential losses and make a bad situation worse. 

While I was doing some research, I happened to find an article in my favorite magazine (Business Credit.) In the May 2017 edition, there is an article that was written for this situation specifically---Chapter 15's!! I reached out to the author who in turn passed my information on to his legal source and put the two of us in contact. I got the answers I needed! Furthermore, I was able to negotiate payment on the previously closed invoice (pre-filing) and ferreted out the validity of what the company was purporting (not in actual bankruptcy.) 

It's always fun learning new things and keeping our jobs interesting, though the process may get a bit stressful. This time it all worked out well!