Here's a handy "cheat sheet" designed to help you cover all your bases if one of your clients ever files bankruptcy. 

It's always a big deal when one of your clients files bankruptcy, particularly if you are the one left with outstanding bills. The last thing you want to be doing at that point is scratching your head wondering what your next step should be.

With that in mind, all businesses should have an easy to follow check list of actions when this occurs. As with all checklists this is designed purely as a starting point to help you make sure you're doing a complete job. It is important to remember that each situation is unique and to seek advice from a professional if you feel the situation is out of hand. Professionals such as financial counselors, registered trustees (accountants who are registered bankruptcy trustees), accountants, lawyers or community advice centres are a good starting point.
 
That said, the list below is a great checklist and starting point for what steps to take when an account files bankruptcy: 

1. Contact the carrier and arrange for any goods in transit to be returned to your office.
   
   
2. Zero your credit limit - at least until the dust settles and the debtor has received authorisation to use cash collateral.
   
   
3. Begin to build your case against a potential preference claim. If you receive a claim, do not pay it without consulting your legal advisor and learning about your rights and options. 
   
   
4. Ask the debtor for a statement showing the invoices and the balances they show as being due to your company as of the filing date. Expect some resistance on the part of the debtor to providing this information. Once it is received, begin to gather documentation to support your claim (e.g., proof of deliveries) as quickly as possible.
   
   
5. When a dispute arises with the debtor over the amount of the claim, always negotiate first. In many instances, the debtor will be willing to settle the dispute outside of court - especially if you can document your claim.
   
   
6. File the proof of claim with the court before the established deadline using registered mail. If you have any questions about how to complete the proof of claim, consult your legal advisor.  Keep the return receipt along with a copy of the proof of claim in a fireproof file cabinet or a safe.
   
   
7. Amend your claim if you find you have made an error on the original filing.
   
   
8. File a claim, even if you are only owed a small amount. Even a small recovery on a small balance due is better than nothing.
   
   
9. Give serious consideration to joining the official unsecured creditors committee if you are asked to do so. Joining the committee will give you a good deal of influence over the activities of the debtor while in bankruptcy.
   
   
10. Read everything sent your company by the debtor. You may read hundreds of pages of documents before you find something of interest or concern to you, but the only way to know is to read every document you receive.