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Creditors and bankruptcy: Two lessons from the SunEdison case

Bankruptcy is a process that is designed to offer those who are approved with a fresh financial start. Although this process can be beneficial to business owners that find themselves struggling financially, it can lead to serious difficulties for the creditors that provided the backing for these entrepreneurs to get their business running or those that sold products to the business and are awaiting payment.

What's a creditor to do?

In these situations, creditors have rights. This is highlighted in a recent case involving a solar power developer. The company, SunEdison Inc., filed for bankruptcy with over $16 billion in debt. The creditors that carried unsecured debt are taking some steps to help better ensure they receive some payment.

Creditors in similar situations can learn from these steps. Here are two of the more applicable tips:

  • Honor bankruptcy law. Once a petitioner has received approval to move forward with a bankruptcy proceeding, the court issues an automatic stay. This court order requires creditors cease efforts to seek payment from the debtor. When issued, the creditor should honor this order and cease contacting the debtor. Instead, the creditor should take the proper steps with the court handling the case.
  • Push for an investigation. In some cases, an investigation may be beneficial. In this situation, there was speculation that the company's financial woes were connected to the wrong-doings of leaders in the company. If supported, the creditors may be able to hold the individual leaders liable.

Pushing for an investigation may prove beneficial for the creditors in the SunEdison case. Although this same strategy may not be beneficial to every creditor, it provides an example of how creditors can push to recoup some of their funds.

Additional strategies are available and can be tailored for the unique situation of each individual case. Contact an experienced attorney to discuss your options and better ensure your business interests are protected. 

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