What should we di if we are acreditor and our debtor is filing for bankruptcy?
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What should we di if we are acreditor and our debtor is filing for bankruptcy?
We have a small (2 person) business. A local company owes us $1924 and is filing Chapter 11 bankruptcy. We received a letter asking if we want to file a motion to object to the Unsecured Creditors Committee. The letter also stated that they want to request that a retainer fee of $10,000 be held in trust for the secured counsel. Should we object? If so, why?
Asked on December 16, 2010 under Bankruptcy Law, Indiana
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 14 years ago | Contributor
First, who sent you a letter requesting a retainer fee--a law firm? If so, don't pay it, unless you feel that paying $10 to *maybe* recover $1,924 is a good bargin. You can and should put your claim in and you can object to the bankruptcy if there are good grounds to object on your own--you don't need an attorney, and an attorney would not be worth it for this amount.
If you are an unsecured creditor, if you're lucky, you'll get a few dimes on the dollar. If you're a secured creditor, you may be able to get the property or asset serving as securityy. Probably for this amount of money, it is not, unfortunately, worth much effort on your part. At least it should be a tax loss if you're not paid.
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