Customer and Supplier Credit Risk Toolkit

Resources to help deal with customer and supplier contract counterparty credit risk when drafting contracts, during the debtor's pre-bankruptcy financial difficulty and during the bankruptcy process.

Practical Law Bankruptcy and Practical Law Finance

Companies should develop strategies to protect their positions under long-term contracts against the risk that their customer or supplier contract counterparties may face financial difficulties and file for bankruptcy. When a counterparty files for bankruptcy, it may then assume, assign, or reject certain types of contracts, subject to the terms of those contracts. The debtor may also seek to recover preferential transfers ( www.practicallaw.com/0-382-3698) made while insolvent ( www.practicallaw.com/6-382-3544) within 90 days of filing for bankruptcy.

A non-debtor who anticipates and prepares for the possibility that its contract counterparty may file for bankruptcy should be in a better position to protect its interests and maximize its recovery in a bankruptcy proceeding. The non-debtor can use various strategies to protect its interests when drafting a contract and during the debtor's pre-bankruptcy financial difficulty, such as:

The non-debtor can use various strategies to protect its interests during bankruptcy, such as:

This Toolkit contains continuously maintained practice notes, standard documents and checklists to help counsel develop strategies to protect the non-debtor's positions both before and after a customer or supplier counterparty is in bankruptcy.

 

Practice Notes

 

Standard Documents and Clauses

 

Checklists

 
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