Although this guide has been developed from the perspective of the debtor, a bankruptcy filing may have a significant impact on the various parties that have conducted business with an entity that files for bankruptcy. Creditors often move quickly to protect their claims against the debtor. For example, creditors have rights under the Bankruptcy Code to reclaim inventory that was recently sold to or is on consignment with the now-bankrupt entity. Creditors will need to give careful consideration to their estimates of collectability for receivables from a customer that filed for bankruptcy. Even if the creditors' claims are fully secured, there is risk that receivables may not be repaid in full and often times such receivables may be settled for considerably less than their stated amounts. In addition, the Bankruptcy Code has provisions for protecting physical assets that are in use by a bankrupt customer or supplier. When a company has guaranteed the debt of an entity that has filed for bankruptcy, it should evaluate whether a liability for the guarantee should be established, or, if the company has already established a liability, whether the liability should be adjusted.

On the other hand, certain payments received from the bankrupt entity in the period prior to the filing of the petition (typically 90 days) may have to be remitted back to the debtor. These items, known generally as preferential transfers, allow the Court to protect the interests of all creditors with claims in the bankruptcy proceedings. For example, a debtor in the days prior to the filing may pay some vendors while withholding payment from others. The preferential transfer provisions in the Bankruptcy Code provide for those funds to be returned to the debtor so that an equitable disbursement can later be made. A debtor would generally record a receivable from the payee when the Court approves the return of the original payment and a corresponding liability subject to compromise, representing the expected claims to be filed by the payee, since it was forced to return its original payment.

While the intent of the process is understandable, it can create cash flow issues for an entity that is forced to return funds it received from the debtor even though the services or inventory that it provided to earn those funds cannot be recovered. As with the debtor, counsel is critical in protecting a creditor's best interests as there are defenses against remittance of funds for preferential transfers.