Preference payments and proofs of claim: getting paid when a hospital, nursing home, or broker goes bankrupt

When a hospital, nursing home or broker files for bankruptcy, a ride company’s unpaid invoices stop being a collection problem and become a claim in a court case. Four things follow. Collection of old balances stops. A deadline appears for filing a claim. Rides given after the filing are paid under different rules. And the customer may ask you to return some of the payments it made in the 90 days before it filed.

If your customer has only started paying late, the steps are different, and what to do when a broker pays late covers them. This guide uses the court orders in three recent cases, Modivcare (2025), Prospect Medical Holdings (2025) and Steward Health Care (2024), to show how the rules work. Modivcare’s case is also summarized in Is Medicaid NEMT going away? and on the Modivcare broker page.

What changes when a customer files for bankruptcy?

The filing date sorts everything. What the customer owed you on that day becomes a pre-filing claim in the court’s process, rides after that day are new debts, and payments you received just before it can be challenged.

All three cases here are Chapter 11 cases, where the business keeps operating while it reorganizes or sells assets. In Chapter 7 a trustee closes the business and sells its assets, and the claim deadline is fixed by rule. The rules below name the chapter where it matters.

Can you keep collecting an old balance after a filing?

No. A bankruptcy petition operates as a stay “applicable to all entities” of any act to collect, assess or recover a claim that arose before the case began, and of any lawsuit to collect one (11 U.S.C. 362(a)(1) and (6)). That covers phone calls, demand letters, collection agencies and court filings on old invoices. It also stops you from setting off an old balance against money you owe the customer, such as a credit (362(a)(7)).

The stay applies without any court order. A creditor can ask the court to lift it for cause (362(d)), but that is a motion, not a letter. The stay reaches only claims that arose before the filing, so rides you give afterward are covered in a separate section below.

Do you have to file a proof of claim, and by when?

In Chapter 11, you must file only if the customer did not list your claim on its schedules, or listed it as disputed, contingent or unliquidated (Bankruptcy Rule 3003(c)(2)). A claim listed without those labels is prima facie valid in the listed amount (Rule 3003(b)(1)). Anyone who must file and does not will not be treated as a creditor for voting and distribution. In a voluntary Chapter 7 case, the deadline is 70 days after the filing, and 90 days if creditors forced the case (Rule 3002(c)).

The court sets a Chapter 11 deadline, called the bar date, and it varies. In three recent health care cases the general bar date fell between 6 and 16 weeks after the filing:

Read the customer’s schedules before the bar date. If the scheduled amount is lower than your records, file, because a signed proof of claim replaces the scheduled entry (Rule 3003(c)(5)). Here is what the three cases’ orders add:

• Use Official Form 410. Attach redacted copies of your invoices and agreement. The form warns that a fraudulent claim can bring a fine of up to $500,000, up to five years in prison, or both.
• Take rider details off the attachments. Form 410 requires filers to leave out or redact information entitled to privacy, and Modivcare’s order told creditors to redact or hide personal information in supporting documents. It also allowed a summary of voluminous records, with the documents sent to the debtor’s counsel within ten days of a request.
• File against the right company. Modivcare’s order required each proof of claim to name one debtor, and treated a claim that named several as filed only against the parent, ModivCare Inc. Use the legal name on your agreement.
• Deliver it the way the notice says. The Modivcare order and the Prospect notice accepted filing through the court’s electronic system or the claims agent’s website (the company handling the case’s paperwork), or by mail actually received by the bar date. Both refused fax and email.
• Do not use the form for new rides. Form 410 says not to use it for an administrative expense request. Those follow section 503, covered next.

Your claim is allowed unless someone objects (11 U.S.C. 502(a)). The Code gives priority for goods the debtor received in the 20 days before the filing (503(b)(9)), but a ride is a service, so that priority does not reach unpaid trips.

How are rides after the filing paid?

Rides you give a debtor after it files rank as administrative expenses, under 11 U.S.C. 503(b)(1)(A), which allows the “actual, necessary costs and expenses of preserving the estate.” The statute lets you file a timely request for payment (503(a)), and a case may set its own deadline for that request.

Modivcare’s orders show how it worked for ride vendors. Its September 30, 2025 order gave the debtor’s undisputed obligations for post-filing services under purchase orders placed before the filing “administrative expense priority status” under that section. The court set February 5, 2026 as the last day to file a proof of administrative claim, 38 days after the plan took effect on December 29, 2025. Forms had to be received by the claims agent, and email and fax did not count.

Ask the customer in writing how and when it will pay for post-filing rides before you keep dispatching them. Also read any critical vendor order, because Modivcare’s interim order of August 21, 2025 said a vendor that accepted an order for services after that date was “deemed to have agreed” to provide them on the order’s trade terms, “regardless of the existence of prepetition amounts owed.”

If your agreement says it ends when the other side files, you cannot rely on that clause against the debtor: an executory contract, one that both sides still have duties under, may not be terminated “solely because” of the filing, with a few exceptions (11 U.S.C. 365(e)). Talk to a bankruptcy lawyer before you stop serving a debtor that is still under contract.

What is critical vendor treatment, and how do you get it?

A debtor can ask the court for permission to pay selected vendors on their pre-filing invoices, because it cannot operate without them. The vendor does not apply, and the debtor is authorized to pay, not required to.

Modivcare’s first-day motion described a network of about 4,100 transportation vendors paid per trip or by mileage. It listed $91.6 million of estimated pre-filing transportation vendor claims, and said that under some of its contracts with state agencies and health plans, its own right to be paid depended on paying those vendors. The August 21, 2025 interim order capped interim payments to all trade vendors at $99 million, and a September 18 order raised the cap to $150 million. The September 30 final order then said:

• The debtor chooses. It decides which claims to pay, and may negotiate a lower amount with a creditor before paying it.
• Payment comes with terms. A creditor that accepts payment agrees to keep serving on terms as good as those it had 180 days before the filing, or on terms the debtor finds satisfactory.
• Stopping service reverses it. If the creditor accepts payment and then stops serving on those terms, the payment is treated as an unauthorized post-filing transfer that the debtor can recover on written request, and the old claim is reinstated. The creditor can ask for a hearing.

If you are not on the debtor’s list, ask its counsel how to be considered, and keep serving only on terms you can afford. Pre-filing invoices that are not paid under the order stay in the general unsecured class. Under the plan Modivcare filed on December 5, 2025 and the court confirmed on December 15, each holder of an allowed general unsecured claim received a share of 2 percent of the new common interests, before dilution, plus warrants. A holder with a claim under $1,000,000 could elect a share of a $32,000,000 cash pool instead, divided among every general unsecured holder. That class included a second lien notes claim of $316,223,250 plus interest.

How do you answer a preference demand?

A preference demand is a request to return payments you received from the debtor on old invoices in the 90 days before it filed. Do not ignore it, and do not pay it before you have checked the defenses, because they can end it.

The Code lets a trustee avoid a transfer to a creditor on an old debt, made while the debtor was insolvent, within 90 days before the filing, that lets the creditor receive more than in a Chapter 7 liquidation (11 U.S.C. 547(b)). In Chapter 11 the debtor itself, as debtor in possession, has a trustee’s powers (11 U.S.C. 1107(a)). Insolvency is presumed during those 90 days (547(f)). Since 2019 the statute also says the trustee acts “based on reasonable due diligence” and “taking into account a party’s known or reasonably knowable affirmative defenses.” For Modivcare, filed August 20, 2025, the 90 days began May 22, 2025. The creditor must prove its defenses (547(g)), and these four fit ride invoices:

• Ordinary course (547(c)(2)). The payment was on a debt incurred in the ordinary course and was either made in the ordinary course of both parties’ dealings or made according to ordinary business terms. Your own history decides it: invoice dates against payment dates, before and during the 90 days.
• Later rides (547(c)(4)). You gave the customer new value after the payment, such as rides, and the customer did not pay for that value with another transfer the trustee cannot avoid. That value reduces what can be recovered.
• Paid on the spot (547(c)(1)). The payment was a substantially contemporaneous exchange for new value, such as cash or a card at drop-off.
• A small total (547(c)(9)). In a case filed by a debtor whose debts are not primarily consumer debts, the transfer is safe if the aggregate value of all property that constitutes or is affected by it is under $8,575. That figure applies to cases filed on or after April 1, 2025, as adjusted by the Judicial Conference (90 FR 8941). Cases filed before then use $7,575, which covers Prospect (filed January 11, 2025) and Steward (May 6, 2024). Modivcare’s case uses $8,575.

An example: a ride company invoices a nursing home chain monthly. In the 90 days before the chain files, it receives $14,000, $16,500 and $15,000, each about 38 days after the invoice date, which matches the 36 to 40 days its payments took the year before. Those payments total $45,500, but timing like that is the kind of record the ordinary course defense uses. If the court rejected that defense, and the company also gave $9,000 of rides after the second payment that were never paid, the later rides defense would reduce the amount at risk by up to $9,000.

Two more points matter. A small demand has a venue rule: for cases filed from April 1, 2025, a trustee suing a noninsider over a business debt under $31,425 must sue in the defendant’s home district (28 U.S.C. 1409(b)). And the court must disallow the claim of a creditor that received an avoidable preference until the creditor pays the amount back (11 U.S.C. 502(d)). A confirmed plan can keep the exposure alive: Modivcare’s plan kept the reorganized company’s right to bring claims that arose before the filing, subject to the plan’s releases, and the plan’s definition of those claims includes avoidance actions. For a demand letter, call a bankruptcy lawyer early.

What a ride company does in the first week

The first week is about finding the facts and the dates. These steps assume a Chapter 11 case:

1. Stop all collection on pre-filing balances. That includes automatic past-due emails and collection referrals.
2. Find the notice of bankruptcy. Official Form 410 says the filing date is on the notice (Form 309) you received.
3. Look yourself up in the customer’s schedules. Check the amount, and whether the claim is marked disputed, contingent or unliquidated. Note the bar date.
4. List what you are owed as of the filing date. One line per invoice, with the trip dates, and keep post-filing rides on a separate list.
5. Pull your payment history for the 90 days before the filing. Keep the invoice dates and payment dates together, for preference defenses.
6. Decide whether to keep serving the customer. Read any critical vendor order and the terms for post-filing rides first.

Keeping invoices and payments in one place in HealthRide

HealthRide groups each payer’s completed trips into invoices with due dates, and records check, ACH and wire payments against the invoice they pay. Trip records keep GPS-recorded miles, timestamps and signatures, and the trip log exports to CSV or PDF. So the invoice dates and payment dates a bankruptcy claim and a preference defense both depend on sit in one place. See invoicing and reports.