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Reading bankruptcy accouncements may not be your idea of fun, but it could help save your company money if one of your customers goes belly up. Under the law, you have the right to reclaim any items shipped to a newly bankrupt company, provided you give the customer or the bankruptcy court notice within 10 days of delivering the goods. The one restriction: you may lose the right to reclaim the delivered goods if they have been used as collateral for an obligation of the bankrupt company.

Since you have to act fast to invoke your reclamation rights, it helps to have early warning that a customer is in trouble: keep a close watch on questionable accounts. As soon as you learn of a bankruptcy, moreover, make your claim right away. "If the company is in a different city, ask a business associate there to write the letter for you and deliver it himself," advises Boston bankruptcy attorney Daniel C. Cohn. "Make sure that the letter identifies the items and gives formal notice that you're reclaiming them."

Last updated: Nov 1, 1986




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