Bankruptcy of the Manufacturer's Rep

The bankruptcy of an individual manufacturer's representative is complicated by only two primary factors. The first is that the inventory that he or she may hold, that belongs to him can be lost to the banruptcy estate. This depends on is saleable value, whether the debtor is re true owner of it and whether it is encumbered. It may also depend on the debtors available exemptions and these exemptions vary with each case.

The more difficult problem for the manufacturer's rep is his accounts receivable. Depending on the amount and the debtor's available exemptions, the receivables can be lost to the bankruptcy estate. This loss can result in the wholesalers or the manufacturers not being paid. The failure of payment can or will result in a breach of contract and a discharge and loss of career.

It therefore behooves the debtor to take care to avoid this scenario by obtaining advice early on and taking the necessary steps, such as the creation and proper structuring of a corporation to hold both the receivables as well as the debts.

Charles Chesnutt