Do not give them anything. If a court orders you, comply, but do nothing without an order signed by a judge
IANAL

NAL, but BK can vary by state in regards to discharge and there are different types of BK. In Chapter 7, there can be a look back period where payments to interested parties and lawyers can be “carved back” by the trustee. You are just a vendor, though, who had been paid. It seems more like a problem for your client than for you. If they was using funds in BK for purposes beyond BK, such as setting up a new company, they could be denied his BK filing.

I would refund the balance left on their account, with a note that you are pausing his account until the new year, but expenses you have incurred are non refundable. This might get the payment below a threshold for review y the trustee and would keep you from being out money. Worst case scenario is that the court comes back and request repayment of the remainder of your fees.

a couple weeks ago

Yesterday

until January 1

Bankruptcy cleared in 6 weeks, including over 2-3 major American holidays? Smells fishy.

I find it odd that they would lay out $5k if they were already in receivership, and more odd if they didn’t know or assume there would be issues like this if they were looking at going into receivership.

I would ask for proof of filing to be sent via registered mail from the attorney, and then kinda decide from there.

At the very least, I would put a stop work in on your contractors, ask for time billed, and say “that money is not coming back, as the work was executed in good faith, up until notification”. And then, if the court reaches out to claw it back, you make the same exact case.

If they actually claw it back, I would consider filing a suit for breach and lost revenue due to their own negligence.

Hold it until Jan and see what happens Clawing it back isn’t easy since u r in the UK

A few things:

At a minimum, You should have your client scan a copy of the US Bankruptcy Court’s Filing to validate his claim. It’s also important to know if this is a Ch7 or Ch11 filing.

If your US client just filed bankruptcy, his court hearing (341 Meeting) will not be for 30 days (possibly longer) from the filing date (depends on the state and the court’s back-log)

The purpose of the 341 Meeting is for the Trustee and Creditors to ask questions and validate the business’s claims regarding their petition for bankruptcy.

If the assigned Trustee for the bankruptcy hearing (341 Meeting) does not require any additional information, it takes approximately 45 days for the Court to issue a discharge on the company’s debt.

If the Administrator requires additional documentation, the Bankruptcy hearing will be issued a continuance which will take 2-4 weeks ( then approximately 45 days for a discharge of debt).

The discharge, does not close/end the process. Typically, the Court closes the Bankruptcy case by issuing a final decree.

You stated your client said the business filed Bankruptcy but he paid for your service with a personal account. Unless your client filed personal Bankruptcy, that $5,000 isn’t part of the bankruptcy proceeding. If you hired people to perform work, you have $5k to pay them for their work.

IMO, the Bankruptcy process cannot be resolved by January 1. The process itself will take at least 90 days, plus there are 3 US national holidays that occur between now and Jan 1.

do they suggest a refund via any channel other than the original payment method?

if yes, it’s a scam- and it was a hot credit card that paid you.

Don’t give anything to anybody unless it’s acompanied by a court order signed by a judge.

Don’t refund sounds like a scam