Michael T. Eversden

In its newly released 2023 edition, The Best Lawyers in America® has recognized 44 McGrath North attorneys in the full range of specialty practice areas key to supporting businesses of all sizes across a broad range of industries, and 28 attorneys have been recognized for 10 years or more.  Of these attorneys recognized based on peer-review surveys, seven were named “Lawyer of the Year.” This honor is awarded to only one attorney with the highest overall peer-feedback for a specific practice area and geographic location.  

In its newly released 2022 edition, The Best Lawyers in America® has recognized 47 McGrath North attorneys in the full range of specialty practice areas key to supporting businesses of all sizes across a broad range of industries.  Of these partners recognized based on peer-review surveys, 11 were named “Lawyer of the Year.” This honor is awarded to only one attorney with the highest overall peer-feedback for a specific practice area and geographic location.  

With chapter 11 bankruptcy filings on the rise, all vendors should use this opportunity to evaluate the credit risks that their customers present. Short of terminating the relationship for nonpayment, there are some actions that vendors can take to minimize the risk of continuing to do business with a struggling customer. Below we discuss a variety of possibilities, including some that are not often used but can be very helpful in protecting a vendor’s position.  

Trade creditors often find themselves, especially in hard economic times, in the familiar scenario where struggling customers purchase goods on credit approaching or exceeding their credit limits—in some cases making rosy predictions to creditors about the customers’ prospects for success—only to file for bankruptcy, stiff unsecured creditors for goods purchased in the days leading up to the bankruptcy filing, and use the goods purchased to support the customer’s operations in bankruptcy. Prior to 2005, trade creditors were generally rewarded for their willingness to work with debtors in these situations with general unsecured claims for unpaid shipments, unless their claims were reclamation claims entitled to administrative-expense status. In most cases, this resulted in creditors receiving distributions on their claims in tiny bankruptcy dollars, i.e., distributions worth a fraction of the value of the goods shipped. In 2005, Congress, in connection with its enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”), sought to remedy this situation to some degree by adopting two provisions that significantly alter the relationship between debtors and trade creditors.