Credit Insurance and Chapter 11

As predicted in our previous blog entry, Kodak has filed for Chapter 11 protection in the USA.

Under the US Bankruptcy laws, Chapter 11 gives protection against litigation for non-payment, so that the business can try to restructure, as well as some other potential rights such as being able to cancel contracts or to refinance the business, offering new lenders priority on earnings.

The timescale for a company in Chapter 11 can be a few months, or many years, depending on the individual circumstances.

Credit Insurance policies are specifically designed to meet these needs, and in the case of one of your customers entering Chapter 11 and owing you money, you would be able to make a claim immediately under the policy, protecting yourselves from the impact of non-payment while the Chapter 11 process runs its course.

Some other household names who filed for Chapter 11 protection include American Airlines, General Motors, Chrysler, Delta Airlines, Lehman Brothers, and Crabtree & Evelyn, although Chapter 11 is available to any size of business, including sole traders.