| Course | BUS 307 Business Law II |
|---|---|
| Module | Module 7 |
| Paper type | undergraduate project analyzing a customer's bankruptcy and the seller's rights |
| Length | About 1,030 words, 6 pages |
| Format | APA 7 student paper |
| School | Southern New Hampshire University |
| Program | BS Business Administration |
| Updated | October 2026 |
Free sample paper for BUS 307 Module 7
Recovery Analysis After the Packer's Chapter 11 Filing
[Student Name]
Southern New Hampshire University
BUS 307: Business Law II
Project Two
[Instructor Name]
[Date]
The organization, setting and figures below are a composite written as a model document. No real employer, client, colleague or patient is described.
Recovery Analysis After the Packer's Chapter 11 Filing
Introduction
The packer has bought honey from the business for nine years and was its largest customer in 2025, taking about 40 percent of its honey crop. On September 29, 2025, the packer filed a Chapter 11 petition in Minnesota, citing losses from imported honey prices and a failed expansion. At that date it owed the business $380,000 for four deliveries between July 22 and September 12, on sixty-day terms. Two months earlier, on July 30, it had paid $140,000 on invoices from May. This paper analyzes what the business can recover, what it might have to return and how it should sell on credit in future.
The Timeline
Transactions with the packer before the filing
| Date | Event | Amount | Days before filing |
|---|---|---|---|
| May 14 | Delivery, invoiced on 60-day terms | $140,000 | 138 |
| July 22 | Delivery | $92,000 | 69 |
| July 30 | Payment received for May delivery | $140,000 | 61 |
| August 14 | Delivery | $96,000 | 46 |
| August 29 | Delivery | $96,000 | 31 |
| September 12 | Delivery of 80 drums | $96,000 | 17 |
| September 29 | Chapter 11 petition filed | 0 |
The Automatic Stay
When the packer filed, an automatic stay arose under the Bankruptcy Code, barring creditors from collection calls, demands for payment, lawsuits and efforts to seize property. The business's sales manager had planned to call the packer's owner and demand payment; that call would violate the stay. Mallor et al. (2022) explain that the stay protects a debtor's chance to reorganize and makes creditors line up inside the case instead of racing each other to collect. The business's remedies now lie in the bankruptcy case.
Reclamation and the Twenty-Day Priority
Under the Uniform Commercial Code, a seller who discovers that a buyer received goods on credit while insolvent may reclaim them with a demand made within ten days of receipt, and the Bankruptcy Code preserves a related reclamation right if the seller sends a written demand within the required time. The September 12 delivery was received seventeen days before the filing, outside the ten-day window, so reclamation is not available, and the honey has likely been processed. White et al. (2010) observe that reclamation is often of little practical value for this reason.
A stronger right comes from the Bankruptcy Code's twenty-day rule, which gives sellers an administrative expense claim for the value of goods the debtor received within twenty days before the filing. Administrative claims are paid in full before general unsecured creditors in a confirmed Chapter 11 plan. The September 12 delivery, worth $96,000, qualifies. If the packer reorganizes, the business should receive that amount in full.
The General Unsecured Claim
The July 22, August 14 and August 29 deliveries, totaling $284,000, were received more than twenty days before filing and are general unsecured claims. The business must file a proof of claim by the court's deadline. Unsecured creditors in Chapter 11 often recover a small fraction of their claims; the packer's early filings suggest a range of 10 to 30 cents on the dollar, or about $28,000 to $85,000. Jackson (1986) explains that bankruptcy law aims to treat similarly situated creditors equally, which is why unsecured trade creditors share pro rata rather than being paid by who complains loudest.
Preference Exposure
The debtor or trustee may recover payments made to creditors within ninety days before filing, on account of an existing debt, while the debtor was insolvent, if the payment left that creditor ahead of where a liquidation would have put it. The July 30 payment of $140,000 for the May delivery falls within the ninety days, paid an existing debt and very likely meets the other elements, since the packer appears to have been insolvent by summer.
Two defenses may protect the business. The ordinary course of business defense applies if the payment was made according to ordinary business terms or in the ordinary course of dealings between the parties. The packer had paid on sixty to seventy days for years, and the July payment came seventy-seven days after delivery, slightly late but within the range of past practice, which supports the defense. The new value defense reduces preference exposure by the value of goods the creditor later supplied on credit and was not paid for: the business delivered $288,000 of honey after July 30 and was not paid, which would likely offset the entire $140,000. Together, these defenses make it unlikely the business will have to return the payment.
Estimated Recovery
Expected outcome
| Claim | Amount | Expected recovery |
|---|---|---|
| Twenty-day administrative priority | $96,000 | $96,000 if plan confirmed |
| General unsecured claim | $284,000 | $28,000 to $85,000 |
| Preference exposure | $140,000 | Likely defeated by new value and ordinary course |
| Total owed | $380,000 | About $124,000 to $181,000 |
Recommendations
Immediately, the business should stop all direct collection efforts, file a proof of claim listing the $96,000 administrative claim and the $284,000 unsecured claim, and ask its lawyer to file a motion for payment of the administrative claim. It should keep records of the July payment and its history of payment terms to support the preference defenses.
For the future, the business sold 40 percent of its crop on credit to one customer without a credit limit. It should set credit limits for each buyer, shorten terms to thirty days, ask for deposits from buyers whose payments slow, and, for large customers, take a security interest in the honey sold until paid, perfected by filing a financing statement, which would make it a secured creditor in a future bankruptcy. It should also spread sales across more packers. No single buyer should take more than a quarter of the crop, which would have limited the exposure here to about $240,000 at most and probably much less. The business's sales manager will review every buyer's payment timing monthly, since the packer's payments had slipped from about sixty days to seventy-seven before the filing, an early warning the business did not act on.
Conclusion
The packer's bankruptcy stops collection but leaves the business with real rights. The September delivery should be paid in full as an administrative claim, the rest is unsecured and will recover only a fraction, and the July payment is probably safe because of the business's later deliveries and long payment history. Credit limits, shorter terms and security interests would reduce the loss next time.
References
Jackson, T. H. (1986). The logic and limits of bankruptcy law. Harvard University Press.
Mallor, J. P., Barnes, A. J., Bowers, L. T., & Langvardt, A. W. (2022). Business law: The ethical, global, and e-commerce environment (18th ed.). McGraw-Hill Education.
White, J. J., Summers, R. S., & Hillman, R. A. (2010). Uniform commercial code (6th ed.). West.
What the BUS 307 Module 7 instructions ask for
Project Two in BUS 307 usually asks you to analyze a complex business situation that draws on several areas of commercial law, often sales, secured transactions and bankruptcy, and to advise the business. You identify the legal issues, apply the relevant rules in a logical order, estimate what the business can recover or must pay, and recommend actions for now and for the future. Strong submissions keep track of dates and amounts, since many bankruptcy rights depend on precise timing, and distinguish the categories of claims, from secured and priority to general unsecured. They end with practical changes to how the business sells on credit. Expect to cite the specific Code sections or rules for each claim.
How this BUS 307 Module 7 project two example is built
The paper starts from $380,000 owed for honey delivered between July and September, with the packer filing for Chapter 11 on September 29. It explains that the automatic stay stops collection calls and lawsuits immediately. It finds that $96,000 of honey was delivered within twenty days before the filing, which qualifies for administrative priority and should be paid in full if the case succeeds, and that a written reclamation demand would have helped only for goods received within ten days. The remaining $284,000 is a general unsecured claim likely to recover a fraction. It assesses the $140,000 payment received sixty days before filing as a possible preference, examines the ordinary course defense and recommends new credit terms.
Where the BUS 307 Module 7 rubric puts the points
Project Two is commonly graded on identification of the issues, accurate application of sales, secured transactions and bankruptcy rules, attention to timing and amounts, quality of recommendations and professional presentation. High-scoring projects organize claims by priority, apply each timing rule to the actual dates, assess defenses rather than assuming the worst and give the business both immediate steps and preventive changes. They estimate likely recoveries with stated assumptions. Projects lose credit for treating all claims alike, for ignoring the twenty-day priority or preference rules, for recommendations without deadlines and for skipping prevention. A timeline table of deliveries and payments is often the single most useful element in these papers.
BUS 307 Module 7 help: the mistakes that cost points
Bankruptcy problems reward careful timelines. List every delivery and payment with its date, then measure each against the filing date, since reclamation, the twenty-day priority and preferences all depend on how many days passed. Separate the business's claims by category, because each is paid differently. When you assess preference risk, check the defenses, especially ordinary course of business and new value, before concluding the payment must be returned. Finish with credit practices that would reduce the loss next time, such as shorter terms, credit limits or retaining a security interest. State your recovery estimates as ranges with assumptions, since plan outcomes are uncertain.
Get BUS 307 Module 7 written to your instructions
Send the BUS 307 Project Two guidelines and the transaction details. The paper will map the seller's claims in bankruptcy, from reclamation and priority to preference exposure, and recommend protections. Two days, roughly; your first project is free. The paper above is an original model document written by our desk, not a submitted student paper and not an official Southern New Hampshire University document.
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BUS 307 Module 7 questions, answered
Where can I find a free BUS 307 Module 7 Project Two sample?
This page includes the complete BUS 307 Project Two analysis of a honey seller's rights after a packer's bankruptcy.
What is the automatic stay in bankruptcy?
An injunction that arises when a bankruptcy case is filed, stopping most collection efforts, lawsuits and enforcement actions against the debtor and its property.
What is the twenty-day administrative priority for sellers?
A Bankruptcy Code provision giving sellers an administrative expense claim, paid ahead of general unsecured claims, for the value of goods the debtor received within twenty days before filing.
What is a preference in bankruptcy?
A payment to a creditor on an old debt, made within ninety days before filing while the debtor was insolvent, that left the creditor better off than a liquidation would; the trustee may claw it back unless a defense applies.
How can sellers protect themselves against customer bankruptcy?
Through credit limits, shorter payment terms, deposits or letters of credit, monitoring customers' payment patterns and taking a perfected security interest in goods sold on credit.