"Critical Vendor": The Courts Don't Think It Means What You Think It Means

December, 2021
Andrew L. Brown
ABI Journal

Picture the following scenario: You are a small business owner and a supplier of goods to a customer who has failed to pay for the goods that you provided to them. You call to inquire about the missed payments. The customer is very apologetic and seeks to maintain this critical business relationship, so the customer sends a check as partial payment, which is promptly cashed. A month later, that customer files for bankruptcy. The customer seeks to continue doing business with its vendors, as that is critical for them to survive. The bankruptcy court enters an order allowing the customer to pay its critical vendors. You receive payment on the rest of the money owed. A year later, you receive a letter from a law firm that represents the estate of the bankrupt customer, which demands that you return the partial payment received before the bankruptcy, or they will file a lawsuit against you. What is going on, you ask yourself? I thought I was critical?

Related Professionals

Media Contact

Lisa Altman, Jaffe PR, Senior Vice President

About Potter Anderson

Potter Anderson & Corroon LLP is one of the largest and most highly regarded Delaware law firms, providing legal services to regional, national, and international clients. With more than 100 attorneys, the firm’s practice is centered on corporate law, corporate litigation, intellectual property, commercial litigation, bankruptcy, labor and employment, and real estate.

Jump to Page

Necessary Cookies

Necessary cookies enable core functionality such as security, network management, and accessibility. You may disable these by changing your browser settings, but this may affect how the website functions.

Analytical Cookies

Analytical cookies help us improve our website by collecting and reporting information on its usage. We access and process information from these cookies at an aggregate level.