PA – Business and Financial Img

Business & Financial Services

Critical Vendor & Section 366 Utility Motions

A reorganization of a company under Chapter 11 of the U.S. Bankruptcy Code can lead to creditor concern and doubt about when and if the debts will be paid. KMK attorneys have a long history of experience with critical vendor arrangements and know the traps to avoid and key protections to incorporate into agreements.

 

One tool a debtor under Chapter 11 may use is to designate certain creditors as “critical” vendors. This designation is often coveted because a creditor’s pre-bankruptcy claim gets paid, in whole or in part, right away. But the trade-off is that the creditor must continue to extend credit to the Chapter 11 debtor which involves additional risk.

 

Section 366 Utility Motions are another tool that debtors sometimes use that may not fully protect utility companies to the fullest extent that bankruptcy laws allow. KMK attorneys take a proactive role in the process to ensure that utility company clients’ interests are being protected with cash deposits, advance payment arrangements, and other security that is acceptable to the creditor.

 

In the event of litigation, KMK has substantial experience and practice in bankruptcy courts that provide us with the ability to champion and safeguard your interests.



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