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Question - Subscriber Goes Bankrupt
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Ken -
Always benefit from your hosted forum for our industry. The information exchanged has value for all of us. Have just received notice from Bankruptcy Court that one of my commercial Burg & Fire alarm systems customers has filed for Chapter 7. I can reach no one with the account to even determine if building is still occupied, still has power and still has alarm systems tied to working phone lines.
Would love to cancel monitoring, but absent any instructions from customer, courts, whatever - am afraid to do so. Test signals are not coming in but if someone had temporarily interfered with system and then reconnects system expecting it to work and be monitored we could be in trouble.
Your thoughts on this matter would be helpful.
Seth Oginz
Security Consultants Unlimited
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Answer
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The notice you received from the Bankruptcy Court advised you that your commercial subscriber had filed either Chapter 7 or Chapter 11. The name of the attorney filing for the subscriber will be listed unless there is no attorney, which is unlikely. You can call the attorney to find your subscriber and give whatever notice you decide to give.
If it's a Chapter 7 filing the name of the Trustee will also be on the notice. You can call the Trustee. You can tell the Trustee that you are terminating alarm service, effective immediately, unless the Trustee agrees to engage you and pay you as an administrative creditor for the period of time starting with the date the bankruptcy was filed until service is discontinued. You should also get assurance that the Trustee has funds in the estate or reasonable expects to get the funds.
You can also check the court records, look at the debtor's schedules and list of creditors, and ascertain the bank holding the mortgage on the building, assuming there is one, which is likely. You can call the bank and ask it to agree to pay you for continued service. Upon a Chapter 7 filing your subscriber is no longer responsible for prepetition debt. The Trustee succeeds to the interests of the debtor but is a new legal entity with whom you are not required to continue doing business with.
Same goes for a Chapter 11 filing, except there isn't likely a Trustee appointed to deal with; the debtor is a Debtor in Possession, but that too is a new legal entity with whom you don't have to continue doing business. You can't extort or demand that prepetition debt be paid, but you can demand payment for any services rendered or to be rendered post petition filing.
You are not a public utility service that may be prohibited from discontinuing services absent a Bankruptcy Court order. However, since your service includes commercial fire you may be required in your jurisdiction to to notice of termination of service and in some jurisdictions even consent from the AHJ to discontinue service. That won't apply for the burg service.
Navigating in the bankruptcy court is a specialty and requires knowledgeable bankruptcy counsel. Don't depend on your cousin Vinny.
If enough money is at stake, give me a call. If account is not worth your time and effort give notice of termination of service.
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