Should I still pay the company I hired if it has filed Chapter 11? 13 Answers as of December 09, 2014

I hired a company to do consulting work and they filed chapter 11 this September. The work is only at 50% completed stage. The contract stayed, they will refund me the money if the consultation is not completed. I still have one payment left with them. Should I continue using them, and send them the last payment, or just stop paying them?

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GARCIA & GONZALES, P.C.
GARCIA & GONZALES, P.C. | Richard N. Gonzales
Call the assigned Chapter 11 Trustee (who represent the creditors) and the Attorney representing the Chapter 11 Debtor, and compare their answers. I would not pay anything without something in writing that the Debtor will fulfill his/her/their contract with you.
Answer Applies to: Colorado
Replied: 12/9/2014
Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
You need to see a lawyer. Sorry for the delay in getting back to you.
Answer Applies to: California
Replied: 12/9/2014
Law Office of Melissa Botting | Melissa Botting
Several items need to be filed on the first day of a bankruptcy. One of those is permission to retain certain employees. If the company filed in September, you should be able to review the filings. If they have retained the employees necessary to complete your contract, that would be a good sign. A trustee may have been appointed or the original management may be" debtors in possession". That information is in the filing documentation. I would not make any additional payments until the court appointed management of the reorganization explain the plans to you. They may finish your contract in order to induce you to pay to help finance their reorganization. They may walk away from your contact., Until you see the plans, do not provide more money. you will have a very difficult time getting any of it back.
Answer Applies to: Texas
Replied: 12/5/2014
Danville Law Group | Scott Jordan
It is difficult to say what you should do without knowing more facts. Chapter 11 bankruptcy is a method of reorganizing the business and consolidating debt, it is not a mechanism of closing the business. This means that the company is probably still in business and that they have an enforceable contract with you. You remain obligated under the terms of that agreement. Their filing bankruptcy may or may not be a terminating act in the contract, without reviewing the agreement, I cannot say. So, the first thing to do is review the contract to see if you have way of terminating the contract legally. The next thing is to talk to someone at the company to see if they are going to fulfill their obligations. You may want to engage an attorney knowledgeable in Chapter 11 bankruptcy to help you out. I can be contacted at the number below, if you wish to speak with an attorney.
Answer Applies to: California
Replied: 12/5/2014
A Fresh Start
A Fresh Start | Dorothy G Bunce
At this point you can't count on a refund if you aren't satisfied. You also can't count on them completing the work either. So perhaps the best you can do is have a conversation with them about the progress of the work. This company probably does need to keep all of its existing customers and ought to be willing to show you why you should stay. But you won't know unless you ask.
Answer Applies to: Nevada
Replied: 12/5/2014
    Goldsmith & Guymon
    Goldsmith & Guymon | Marjorie Guymon
    The contract is not stayed. You are still subject to all the contract terms. As is the debtor. If you wish to continue then ask that the debtor assume the contract and continue forward.
    Answer Applies to: Nevada
    Replied: 12/5/2014
    Stephens Gourley & Bywater | David A. Stephens
    If the work is not complete I would not pay them until you know if they are accepting or rejecting the contract.
    Answer Applies to: Nevada
    Replied: 12/5/2014
    Steele, George, Schofield & Ramos, LLP
    Steele, George, Schofield & Ramos, LLP | Alan E. Ramos
    There is no quick and easy answer to your question. There are a number of issues that need to be considered. #1 - Do you think the company will be able to complete the project? If yes, making the final payment might make sense. If no, it makes no sense to make the payment, as getting a refund could be difficult (you would have an administrative claim in the bankruptcy). #2 - How difficult would it be to find a replacement consultant? #3 - How much money are we talking about? If it is a small amount, it might not make much difference. It it is a significant amount of money, then the answer to issue #1 becomes critical.
    Answer Applies to: California
    Replied: 12/5/2014
    Richard B. Jacobson & Associates, LLC | Richard B. Jacobson
    I'd suggest contacting them to find out if they are still doing business and if they will continue to honour their contract with you. You can ask them formally to 'assume' the contract which means they would have to pay you unless they totally fall apart. But there is a certain degree of risk that you will make your final payment and not hear anything from them. Hence...try to find out what is really going on, and then decide if you want to continue working with them. If, under the contract, you have to pay them, and there isn't much doubt about that, then they can try to collect from you. Everything considered, it would be a good idea to retain a lawyer experienced in bankruptcy matters to advise you. Also be sure to read all the documents which come to you from your debtor's lawyers, and from the Bankruptcy Court. Good Luck.
    Answer Applies to: Wisconsin
    Replied: 12/5/2014
    Thomas Vogele & Associates, APC | Thomas A. Vogele
    You have what is known as an executory contract in a bankruptcy. The company you contracted with will, in all likelihood, assume (keep) the contract and agree to perform the work. You should contact them to see what their plans are. If they intend to reject your contract, and that results in you being owed a refund, you will need to file a proof of claim in the case.
    Answer Applies to: California
    Replied: 12/5/2014
    Musilli Brennan Associates PLLC
    Musilli Brennan Associates PLLC | John F Brennan
    I would need more details in order to form an opinion. Generally if they are continuing to do the work they are entitled to be paid and the contract remains in effect.
    Answer Applies to: Michigan
    Replied: 12/5/2014
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