303 if it has not been paid and the customer is not paying its debts as they come due. However, certain rules apply to this situation and, if the vendor was wrong and the customer was not insolvent, the vendor could be liable for damages caused to the customer. Thus, this remedy must be used with care. Also, usually the vendor will have to join with two other creditors to initiate a bankruptcy case, so unilateral action may be difficult. In conclusion, a vendor can take affirmative steps to mitigate or even prevent credit losses when one of its customers is in financial difficulty.
Quick action can be crucial to the success of many of the available options.