Do I Lose My Suppliers if I File for Bankruptcy?
May 31, 2019
For some Oregon business owners, bankruptcy may be the only option to save their companies from falling into a financial abyss. However, because the word bankruptcy carries a stigma of financial failure, some entrepreneurs may fear that as soon as they go bankrupt, their suppliers and vendors will walk away. However, this is not an automatic outcome and it may not even be a likely one.
As Chron.com explains, many suppliers and vendors actually have good incentive to maintain a continued relationship with a business, even one going through bankruptcy. If you have regularly ordered supplies, paid for services and offered jobs to vendors and suppliers, they will want your flow of business to continue. So it is in their interest to see your company emerge from bankruptcy.
To assist you in completing bankruptcy, suppliers and vendors may be willing to renegotiate your existing contracts. If you owe debt on some of their services or goods, you could work out an arrangement to reduce the amount you owe. Your suppliers may also be willing to extend your payment schedule, waive late payment penalties, basically make any arrangement that reduces your obligations or takes the financial pressure off of your company.
Some companies only require temporary relief of creditor efforts to collect outstanding bills in order to recover and return to normal operating status. Many suppliers and vendors know this and are willing to make provisions to customers going through bankruptcy so that they do not lose out on important business. Even labor unions will consider renegotiating a contract if they think it will help a company exit bankruptcy.
Business bankruptcies can be complicated affairs and will differ from business to business. For this reason, you should not consider this article to be legal advice; read it only for your educational benefit.