QUESTION
Should I still pay the company I hired if it has filed Chapter 11?
Asked on Dec 05th, 2014 on Bankruptcy - Michigan
More details to this question:
I hired a company to do consulting work and they filed chapter 11 this September. The work is only at 50% completed stage. The contract stayed, they will refund me the money if the consultation is not completed. I still have one payment left with them. Should I continue using them, and send them the last payment, or just stop paying them?
9 ANSWERS
Call the assigned Chapter 11 Trustee (who represent the creditors) and the Attorney representing the Chapter 11 Debtor, and compare their answers. I would not pay anything without something in writing that the Debtor will fulfill his/her/their contract with you.
Answered on Dec 09th, 2014 at 2:44 AM
Probate Attorney serving Friendswood, TX
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Law Office of Melissa A. Botting
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Several items need to be filed on the first day of a bankruptcy. One of those is permission to retain certain employees. If the company filed in September, you should be able to review the filings. If they have retained the employees necessary to complete your contract, that would be a good sign. A trustee may have been appointed or the original management may be" debtors in possession". That information is in the filing documentation. I would not make any additional payments until the court appointed management of the reorganization explain the plans to you. They may finish your contract in order to induce you to pay to help finance their reorganization. They may walk away from your contact., Until you see the plans, do not provide more money. you will have a very difficult time getting any of it back.
Answered on Dec 05th, 2014 at 10:51 PM
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The contract is not stayed. You are still subject to all the contract terms. As is the debtor. If you wish to continue then ask that the debtor assume the contract and continue forward.
Answered on Dec 05th, 2014 at 11:37 AM
At this point you can't count on a refund if you aren't satisfied. You also can't count on them completing the work either. So perhaps the best you can do is have a conversation with them about the progress of the work. This company probably does need to keep all of its existing customers and ought to be willing to show you why you should stay. But you won't know unless you ask.
Answered on Dec 05th, 2014 at 11:36 AM
Bankruptcy Attorney serving Madison, WI
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Richard B. Jacobson & Associates, LLC
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I'd suggest contacting them to find out if they are still doing business and if they will continue to honour their contract with you. You can ask them formally to 'assume' the contract which means they would have to pay you unless they totally fall apart. But there is a certain degree of risk that you will make your final payment and not hear anything from them. Hence...try to find out what is really going on, and then decide if you want to continue working with them. If, under the contract, you have to pay them, and there isn't much doubt about that, then they can try to collect from you. Everything considered, it would be a good idea to retain a lawyer experienced in bankruptcy matters to advise you. Also be sure to read all the documents which come to you from your debtor's lawyers, and from the Bankruptcy Court. Good Luck.
Answered on Dec 05th, 2014 at 10:12 AM
Bankruptcy Attorney serving Walnut Creek, CA
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Alan E. Ramos Law Offices
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There is no quick and easy answer to your question. There are a number of issues that need to be considered. #1 - Do you think the company will be able to complete the project? If yes, making the final payment might make sense. If no, it makes no sense to make the payment, as getting a refund could be difficult (you would have an administrative claim in the bankruptcy). #2 - How difficult would it be to find a replacement consultant? #3 - How much money are we talking about? If it is a small amount, it might not make much difference. It it is a significant amount of money, then the answer to issue #1 becomes critical.
Answered on Dec 05th, 2014 at 10:12 AM
Complex Litigation Attorney serving Costa Mesa, CA
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Thomas Vogele & Associates, APC
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You have what is known as an executory contract in a bankruptcy. The company you contracted with will, in all likelihood, assume (keep) the contract and agree to perform the work. You should contact them to see what their plans are. If they intend to reject your contract, and that results in you being owed a refund, you will need to file a proof of claim in the case.
Answered on Dec 05th, 2014 at 10:12 AM
Appellate Attorney serving Grosse Pointe Farms, MI
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Musilli Brennan Associates, PLLC
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I would need more details in order to form an opinion. Generally if they are continuing to do the work they are entitled to be paid and the contract remains in effect.
Answered on Dec 05th, 2014 at 10:08 AM
Commercial & Bankruptcy Law Attorney serving Powell, OH
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Ronald K. Nims
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Generally, in a Chapter 11 the company intends to continue to do business. However, you need to find out if they are going to honor the contract
Answered on Dec 05th, 2014 at 10:08 AM