A client bankruptcy can leave your staff- ing firm with unpaid bills for services rendered and eliminate a source of continuing business. And in some cases, you may have
to return payments that you did receive, adding to
your firm’s losses.
The U.S. Bankruptcy Code permits the bank-
rupt client (often referred to as the “debtor”) or
a bankruptcy trustee, the court-appointed official
who administers the client’s bankruptcy estate,
In some instances, staffing firms may be able to
Staffing firms can minimize loss by understanding and applying the legal details
of the U.S. Bankruptcy Code.
By Lee W. Stremba, Esq.
When a Client
convince the client or trustee that the preference
claim is invalid or subject to one or more defenses.
Whose Property Is It?
Often, debts of a distressed company are paid by
an affiliated entity or principal, or by an independent
third party such as a bank obligated under a letter of
credit. Even though the payment was made for the
benefit of the debtor, the trustee may be unable to
prove that the payment constituted property of the