Don’t Wait for the Check: How to Get Ahead of the Bankruptcy Curve

Don’t Wait for the Check: How to Get Ahead of the Bankruptcy Curve

When a company you do business with is heading toward bankruptcy, most creditors do what feels natural: wait. Wait for updates. Wait for the filing. Wait to be contacted. Wait for the check.

But in restructuring, waiting almost always means losing.

The creditors who recover the most aren’t the ones who yell the loudest or hire the biggest law firms. They’re the ones who act early—well before the case is filed. They’re the ones who identify risk, organize their claims, and prepare their strategy before the bankruptcy becomes public.

At White Knight Restructuring, we specialize in helping creditors get in front of distress. Here’s what that looks like in practice.

Spotting the Warning Signs

Most distressed companies don’t file overnight. There’s a lead-up—sometimes months in the making. Warning signs include:

• Slower payments or changed terms

• Vendor contracts not being renewed

• Senior leadership turnover

• Increasing reliance on short-term capital or bridge loans

• Press reports about financial instability or missed covenants

For example, in the months before LATAM Airlines filed for Chapter 11, supply chain partners and lessors noticed missed communications, shortened remittance cycles, and changes in procurement patterns. Those who noticed and mobilized early positioned themselves to influence the reorganization and protect their exposure.

Why Early Action Pays

When you engage before a filing, you preserve leverage:

• You may be able to negotiate collateral or improved terms

• You can position yourself to be part of a creditor group once the filing occurs

• You can avoid the common mistake of taking actions (like lawsuits) that get stayed once the case is live

This is especially important for small and mid-sized creditors where some of the largest amount of filings are like Delaware, Texas, and New York—where court proceedings can move quickly and formal creditor committees are often limited to large institutional players.

Building a Pre-Filing Strategy

White Knight works with creditors in pre-bankruptcy scenarios to:

• Review payment history and risk exposure

• Prepare legal and financial documents in advance of a filing

• Coordinate informal groups to amplify negotiating power

• Monitor developments and court dockets

This isn’t a legal fire drill. It’s a focused strategy to be ready if and when the filing comes.

Our founder helped a group of creditors in the Aeromexico case build their strategy and an entire new Plan of Reorganization to compete with the behemoths of the hedge fund world. That work served as notice to the company that money needed to be distributed more equitably. Acting early improves the recovery trajectory, and speaking with one voice can make the “small fish” bigger as the case unfolded.

The Cost of Being Passive

By the time court notices go out and a plan is proposed, many of the key decisions have already been made. Passive creditors often:

• Miss opportunities to challenge or shape key motions

• Get grouped into larger classes without input

• End up with lower recoveries or delayed distributions

A proactive approach avoids those pitfalls.

Final Thought: The Curve Is Coming—Where Do You Stand?

You don’t have to predict every bankruptcy. But when the signs are there, you can choose to stand still—or move ahead of the curve.

White Knight Restructuring helps you prepare, position, and protect your rights before the process leaves you behind. Whether you’re owed $50,000 or $5 million, the outcome starts with your first move.

Let’s make sure it’s the right one.