Matt Whiting wrote:

Is an escrow fund considered a company asset? If it is, then I can see
how a bankruptcy judge would distribute it as part of the creditor
settlement. If it isn't, then it does seem like it should still be
there, bankrutpcy or not.

No, escrow funds are not considered company assets and escrow contracts
usually prevent transfer or reassignment, even in the case of
bankruptcy. They also usually have strict compliance terms with
expiration dates for non-compliance.

It is one area of law where the spirit of the law often trumps contract
law. Meaning, judges get real ****ed off when somebody tried to get
fancy with escrow contract wording to remove normal protections
associated with escrow.

I might be wrong, but I think that vendors are protected if the customer
pops a bankruptcy, but most vendors will opt out given this situation.