Question:

 

Ken;

I just received a notice from the bankruptcy court. One of my clients are

bailing out. (They were in financial trouble in the past and just found a

white knight savior.) Well three months into the project they pull the

plug. My question is

WHAT IS MY OBLIGATION TO CONTINUE TO PROVIDE SERVICES FOR WHICH I WILL

NEVER BE PAID? ( My contract says that if they stop paying I can stop

monitoring) Is this a violation of the proceedings? Or do I just lick my

wounds with the past debt and just make him a COD Customer from now on?

Joel Kent

FBN Security Co LLC

Windsor CT.

 

 

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Answer:

 

You don't have to continue providing service once your subscriber files a

bankruptcy petition. If you do provide service you can charge for the

period going forward. You cannot insist on getting money for any time prior

to the filing of the bankruptcy petition. For any money that you are owed

for prior to the petition filing you have to file a proof of claim with the

clerk of the bankruptcy court. But you can go COD going forward or not

service the account if you don't want to.

You are not a public utility that is prohibited from terminating service in

a bankruptcy situation.

 

For those of you owe want a more technical answer, I should point out that

the alarm contract calling for future services and payments is an executory

contract that is deemed automatically rejected in a bankruptcy case unless

assumed. Therefore, the prudent thing to do would be to insist on a new

contract with the subscriber to be signed after the bankruptcy petition is

filed.

Be careful not to demand payment of the arrears on the old contract for the

pre bankruptcy petition period. That demand would be a violation of the

bankruptcy automatic stay provision [11 USC 362]. You could of course

demand an inspection and reinstatement charge.

You should make it a habit of filing a proof of claim form with the clerk

of the bankruptcy court, even is cases where you get a notice that there

are no assets and no claim need be filed until further notice is sent out.

Often you will miss this additional notice and assets may be discovered in

cases. If the claim form or filing is too difficult [in some jurisdictions

you may have to file it electronically] then have a bankruptcy lawyer do

it. My firm would charge around $100 for comparison.

If you get a chapter 13 petition notice you should file your claim because

that is a wage earners plan and there will be a 36 to 60 month payout,

provided the subscriber - debtor makes the payments. Payments are made to a

trustee who distributes the money usually monthly.