Your Customer Filed Bankruptcy: The Four Deadlines That Decide What You Can Recover

The notice arrives in a thin envelope from the clerk of the bankruptcy court, or as a forwarded PDF from a law firm you have never heard of. Your customer — the one who has been “waiting on the new credit facility” since spring, whose controller stopped answering after the second demand letter — is now a debtor. Your invoice has been sitting in the over-90 column for a while. Your collector has a call scheduled for tomorrow morning.

Cancel the call.

From the instant the petition is filed, four dates decide what you can recover — and the first one is the one you can only lose by breaking. The plan, the committee, the disclosure statement: someone else’s problem for now. Your job this week is a calendar.

The four deadlines, on one page

Deadline one — the stay, because your instinct is the danger

Section 362(a) says the petition “operates as a stay, applicable to all entities.” That means you, whether or not anything has reached your mail.

Section 362(a)(6) stays “any act to collect, assess, or recover a claim against the debtor that arose before the commencement of the case under this title” — the call, the email, the demand letter, the visit. Section 362(a)(1) stays commencing or continuing an action against the debtor, and § 362(a)(2) stays enforcement of a judgment obtained before the case, so a writ already in motion has to stop. Section 362(a)(7) stays “the setoff of any debt owing to the debtor that arose before the commencement of the case under this title against any claim against the debtor”: if you also owe your customer money, you cannot quietly net it out. How you were lawfully working this file last week is beside the point now — no grace period, no exception for a small balance.

Take it seriously because of § 362(k)(1): “an individual injured by any willful violation of a stay … shall recover actual damages, including costs and attorneys’ fees, and, in appropriate circumstances, may recover punitive damages.” The word “individual” is doing real work there, and whether it reaches a corporate case is a question for counsel, not for your collections floor. Separately, § 105(a) lets the court issue “any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title.” Do not go shopping for a loophole in the difference.

One distinction cuts the other way. The Fair Debt Collection Practices Act governs consumer debt and generally does not reach a business-to-business account; § 362(a) is indifferent, turning on the case rather than the type of debt.

You may still file a proof of claim, request payment of an administrative expense, and ask for relief under § 362(d). Your limitations period does not quietly expire while you wait, either: under § 108(c), a period fixed by nonbankruptcy law that had not run out on the petition date lasts until the later of its own end or 30 days after notice that the stay terminated. A reprieve, not a reset — the underlying state deadline still governs.

Deadline two — the twenty-day goods claim most creditors never assert

Section 503(b)(9) allows as an administrative expense “the value of any goods received by the debtor within 20 days before the date of commencement of a case under this title in which the goods have been sold to the debtor in the ordinary course of such debtor’s business.”

Two words carry it.

Goods — not services. The most commonly botched point here. Product, parts, materials, fuel, packaging: inside the statute. Hours sold — transportation, staffing, consulting, repair labor — the text does not reach. A freight failure runs on a different playbook for exactly this reason: line-haul charges buy a service. Invoices that mix product and labor get fought over on their facts, so split the line items now.

Received — not shipped, not invoiced, not due. The window looks back 20 days from the petition date to delivery. Pull the signed delivery receipts; the invoice date is the wrong document.

Why it matters: administrative expenses allowed under § 503(b) rank second under § 507(a)(2), ahead of general unsecured claims. In chapter 11, § 1129(a)(9)(A) requires a plan to give the holder cash equal to the allowed amount on the effective date, “[e]xcept to the extent that the holder of a particular claim has agreed to a different treatment of such claim.” Subchapter V differs: notwithstanding § 1129(a)(9)(A), § 1191(e) allows a plan that provides for paying a § 507(a)(2) claim through the plan to be confirmed under § 1191(b). You assert the claim under § 503(a), which allows an entity to “timely file a request for payment of an administrative expense, or … tardily file such request if permitted by the court for cause.” Many courts set a separate deadline for those — read the bar date order.

Deadline three — the reclamation demand, if you shipped recently

If goods went out in the last 45 days, § 546(c)(1) lets you demand them back — unforgiving about how and when.

The debtor must have received the goods while insolvent, within 45 days before the case commenced, from a seller selling in the ordinary course of its business. That seller “may not reclaim such goods unless such seller demands in writing reclamation of such goods” not later than 45 days after the debtor received them, or not later than 20 days after the case commences if the 45-day period expires after filing.

In writing. Not a call to the warehouse manager.

Read the qualifier at the front of the subsection: the right is “subject to the prior rights of a holder of a security interest in such goods or the proceeds thereof.” So counsel’s first question is whether a lender holds a blanket lien on inventory. Outside bankruptcy, the reclamation rules run on a different and much shorter clock.

The consolation is in the statute: under § 546(c)(2), a seller who fails to give notice in the manner described “still may assert the rights contained in section 503(b)(9).” Reclamation is the upside; the 20-day goods claim is the floor.

Deadline four — the bar date, and the trap inside it

Rule 3002(c) makes a proof of claim timely in a voluntary chapter 7 case, or a chapter 12 or 13 case, if filed within 70 days after the order for relief or entry of an order converting the case to chapter 12 or 13. In an involuntary chapter 7 case, the period is 90 days after the order for relief is entered.

Here is the trap: that clock runs from the order for relief, and under § 301(b) the commencement of a voluntary case is the order for relief — not the day the envelope reached your desk. Two weeks of internal routing is two weeks of your 70 days.

Chapter 11 works differently. Rule 3003(c)(3) provides that the court must set the time to file a proof of claim or interest and may, for cause, extend it — no default number, only the date in the order, with at least 21 days’ notice by mail under Rule 2002(a)(7).

Check how you were scheduled, too. Under Rule 3003(b), an entry on the debtor’s schedule of liabilities is prima facie evidence of your claim’s validity and amount — except a claim scheduled as disputed, contingent, or unliquidated, which Rule 3003(c)(2) requires you to file on, as does a claim left off entirely. If the debtor listed your balance wrong, silence is a concession.

Missing the date is not automatically fatal, but the fallback is worse. Section 502(b)(9) disallows a claim on objection where it is not timely filed, except as tardy filing is permitted under § 726(a) or the rules — and § 726(a)(3) pays late unsecured claims only after the timely ones. Rule 3002(c)(7) lets a court extend the time by no more than 60 days from its order where notice was insufficient to give a reasonable time to file.

Chapter 7 versus chapter 11, from where you sit

In chapter 7 a trustee takes over, and the court may authorize operating the business only for a limited period (§ 721). In chapter 11 the debtor generally stays in possession with a trustee’s rights and duties (§ 1107(a)), and § 1129(a)(9)(A) bars confirmation unless a 20-day goods claim is paid in cash on the effective date — unless you agree otherwise, or the plan is confirmed under § 1191(b).

The order of payment is not a prediction, and nobody honest will give one. Secured creditors look to their collateral. Section 507(a) then ranks unsecured claims: domestic support obligations first, administrative expenses allowed under § 503(b) second, certain employee wages fourth, benefit-plan contributions fifth, specified taxes eighth. General unsecured trade claims come after all of that, and chapter 7 distribution follows § 726(a).

One clock also runs at you. Section 547(b) lets a trustee avoid a payment made on an antecedent debt while the debtor was insolvent, within 90 days before the petition — one year for an insider — that gave the creditor more than a chapter 7 distribution would. A payment that cleared inside that window can be demanded back, subject to the § 547(c) defenses: ordinary course under (c)(2), subsequent new value under (c)(4).

Your first week

1. Stop everything today. Tell whoever is working the file, in writing, and kill any automated dunning.
2. Get the case facts from the docket — legal name, case number, chapter, district, petition date — and calendar all four dates.
3. Separate goods from services on every open invoice, and pull delivery documents for the 20 days before filing.
4. Pull the 90-day payment history before anyone asks for it.
5. Send any reclamation demand through counsel, in writing, if goods moved inside the § 546(c) window.
6. File the proof of claim with backup — contract, purchase orders, invoices, proofs of delivery, statement.
7. Ask who else is on the hook — guarantor, joint obligor, bonded party, affiliate — and get counsel’s read first.

Bankruptcy is where a receivable stops being a collection problem and becomes a filing problem. The files that hold up are the ones somebody built in the first two weeks, before the record went cold. If your customer has not filed yet, that is a different question on a different clock — the work our bad debt recovery team handles. Make that call before a petition makes it for you.

General information for commercial creditors, not legal advice. Laws and deadlines change and depend on the facts — confirm specifics with qualified counsel.