Do you have some procedures that address vendor bankruptcies and class action lawsuits? Also, Please let me know of any standard rules that I might incorporate into my accounting procedures.

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The answer to your question depends on the situation. In general if you have an outstanding balance owed to a vendor who has delivered product or services to your company, then you will most likely be required to make payment in full to the vendor or the court appointed trustee of the bankruptcy filing. However, if the products and services were not delivered, then in the normal course of business, payment is not necessary.

As for the class action lawsuits, we would need to get more information regarding what you are looking for here. These types of lawsuits try to bring in every possible opportunity to get payments or extract money for damages from plaintiffs who feel that they have been wronged.

Also, we are not aware of standard accounting practices in your situation. You and your vendor appeared to be progressing along in your normal course of business and trying to honor your agreements. One business practice to consider is to get the opinion of your legal counsel when you are notified that a vendor has entered into bankruptcy proceedings. Often times the bankruptcy court will issue certain restrictions on how the vendor should operate once they are under bankruptcy protection in order to protect assets that may need to be distributed to creditors. Through your legal counsel you should probably request court documents that would govern how payments will be made to the vendor while they are in bankruptcy and before you make payments.

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