If today your business received notice of a deadline directly affecting your financial interest in a bankruptcy case, would you actually know it? Getting the answer wrong recently cost Goodyear Tire & Rubber Company over $1.4 million.

Receipt of bankruptcy court notices often means a deadline for enforcing your business’s rights is drawing near. They are commonly sent by first-class mail. From there, it is up to the business to process them internally in a timely, reliable manner.

Goodyear learned how important it is to have such a system in place. The company held a $1.4 million claim for goods shipped to the Dana Corporation during the 20 days before it filed for bankruptcy.

Such claims are given a high priority for payment. If valid, Goodyear would have received payment of the entire $1.4 million – all it had to do was file its claim before the deadline set by the court.

The information was contained in a printed notice of which a total of 21 copies were sent to various Goodyear addresses, including one the company itself had designated in its filing. Nevertheless, Goodyear did not file its claim until six months after the deadline. When the company asked the court to excuse the lateness, the court refused.

In evaluating requests like this, many courts focus primarily on the reasons for the delay. Goodyear argued that – since it had a procedure in place to funnel such notices, that none of its files contained the notice, and that no personnel had recollection of receiving it – the notice must not have been received.

The Court applied a different, much more common, presumption: that a notice mailed to a proper address, with proper postage, and is not returned as undeliverable is in fact delivered. The court found "incredible" Goodyear’s position that of the 21 notices sent, not a single one had been properly delivered. The Court suggested that at least some of the notices had been received but either mishandled or ignored by company personnel. Because the Court decided that the delay was within Goodyear’s control, the company’s request was denied. (Goodyear appealed and the matter was eventually settled).

What can Arizona businesses do to avoid the same result?

• Alert debtors in bankruptcy cases of the address you wish to receive notices. If you specify an address and the notices are sent elsewhere, your rights may be protected.

• Establish an internal system to efficiently direct notices – whether received by mail, overnight delivery, fax, e-mail – to proper personnel, preferably those who have contact with your attorneys.

• Make sure the employees who handle court notices are familiar with the procedures and understand that time is of the essence in dealing with them.

• Test your system regularly to make sure it actually functions.

Counsel familiar with insolvency and collection issues can help you stay on top of court-imposed deadlines and reduce the risk that that important notices "slip through the cracks". If your company is owed $1.4 million, you want to keep it – not lose it.

Contact Susan Boswell, managing partner of the Tucson office of the Quarles & Brady law firm, at sboswell@quarles.com or (520) 770-8713. Boswell practices commercial bankruptcy, restructuring and creditors’ rights law.