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Protection from returning payment from a bankrupt customer
Published by: jane 2010-03-16
Over the last few years, I've heard a number of business owners complain how they had to return payments from a newly bankrupt customer. I'm having trouble finding research about this (for the exception of this snippet): ... Also, in the three months before you go into bankruptcy, do not try to favor one creditor over another when it comes to paying your bills. Bankruptcy courts can go back and recover such money from creditors who received payments from debtors before the debtor filed for bankruptcy if those payments were more than the creditor would receive in a liquidation. Happens all the time. And if there is some sort of fraud involved in the payment of one creditor as opposed to another (i.e., payment is made without the debtor having received something of value in return) in the year prior to the filing of a petition for bankruptcy, the court can void the transaction and force the creditor to repay the money. As a business owner, is there any strategy to be bulletproof from having to return a payment due to a recent bankruptcy?


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