Getting Tough On 'Critical Vendor' Status

Law360, New York (February 09, 2009, 12:00 AM ET) -- While courts have traditionally allowed debtors to repay amounts owed to vendors they deemed critical on, or close to, the first day of a bankruptcy case, this practice is changing.

Over the past several years, courts have made it much more difficult to secure “critical vendor” status at the outset of a Chapter 11 case. This is information that is crucial for both debtors and creditors involved in bankruptcy proceedings.

Overview of Recent Circuit Decisions on Critical Vendor Status

Though they have their own individual standards,...
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