In The Matter Of The Receivership…

Posted 2009.10.15 9.30 in Pointless Blather, Work by Stephanie

There’s some words you don’t want to see when you open an envelope.¬†You know any document that opens with that line, is going to be bad news.

We got one of those letters at the office recently. Turns out one of our customers has gone bankrupt. We knew they were in trouble, considering some of their bills had gone unpaid for a very long time. Still, whenever we spoke with them, they were apologetic, times are tough all round, etc., but never said anything about spiraling the drain. Of course, maybe the folks we talked to didn’t know.

So there’s a bit of revenue that we have to write off now. Fortunately it wasn’t too much. The real kicker was reading the fine-print of the letter. This customer had assets that they valued at over $6.5 million – although the trustees stated that when the assets were sold, the recovered value was ‘considerably less’ – they don’t say how much, but it could be anything from 1/10th to 1/2 on the dollar. Then there’s the how-much-did-they-owe – over $10 million to the secured creditors. Secured creditors are like the banks, people who you have to sign over something, to get the loan. If there’s any money recovered at all, the secured creditors get at it first, before anyone else.

Then the biggest group, the unsecured creditors. “Only” $4 million owed there. That’s where we are, but just a drop in the bucket. The letter listed the unsecured group, and how much each one was owed. That was the biggest kick in the teeth – one company I recognized the name, they’re just around the corner from here, got stiffed for $600,000! That’s gotta hurt – I can’t even imaging having that much money, let alone losing that much money! The biggest single one was just under 1 million, that someone got shafted for. Another insane amount. I hope it doesn’t cause these other companies to go down too.

The letter didn’t talk about employees. They usually get screwed as well; especially if there’s anything like unpaid overtime or whatever. Although IIRC employees are actually first in line ahead of the secured creditors… but that’s just for regular salary. Anything like pension, or even just severance, is most likely lost. Not to mention the jobs themselves. And if it was a surprise to them, that just compounds the emotional upheaval.

Although our business’s loss was under $2000, the real shock was that this customer, they had been a client of ours for decades – longer than I’ve been here for sure. It’s always upsetting to see such a long-lasting business go down. They were in manufacturing. We don’t have many manufacturing customers left, I think.

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