What Happens to My Utility Bills When I File Chapter 11?

It becomes clearer that your business will not be able to continue to operate without filing for Chapter 11 bankruptcy or reorganization. However, you are concerned that you won’t be able to pay past-due utility bills. Your business will not recover if your utilities are cut off.

You don’t have to be worried. Here are some things to keep in mind:

As Soon as Your Bankruptcy Is Filed, an Automatic Stay Takes Effect

After your bankruptcy petition has been filed with the court, an “automatic stop” is in effect. This basically means that your business is not subject to any collection efforts. Utility companies will be notified and cannot turn off your electricity, gas, or water for past-due amounts.

You Will Still Have to Pay the Current Charges

Federal law demands that utility companies treat you as a new customer. This can mean that you may be required to guarantee payment by a prepayment, security deposit, or bond.

The utility company may terminate your services if you fail to provide the required surety within thirty days after filing Chapter 11. If you don’t make regular payments, they can shut down your utilities.

Business bankruptcy is a complicated undertaking. Make sure you have solid legal guidance right from the beginning to answer all of your questions.

This post was written by Trey Wright, a Jacksonville chapter 11 lawyer with extensive experience! Trey is one of the founding partners of Bruner Wright, P.A. Attorneys at Law, which specializes in areas related to bankruptcy law, estate planning, and business litigation.

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