Best Practices on Communicating With Troubled Customers

Brad Sandler addressed a group of the National Association of Credit Managers on the topic of potential preference exposure for actions taken before a troubled customer files for bankruptcy. Changes in payment terms, the time between invoice and payment, the number of invoices included in each payment, the form of payment (e.g., check, bank check, wire transfer) could potentially take a payment out of the “ordinary course” and make it subject to avoidance in bankruptcy, even if the change is at the debtor’s request.