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Microsoft is taking steps to make sure it's not left out of pocket as banking customers seek bankruptcy protection against their suppliers.

The company's filed a motion with a US bankruptcy court to ensure it's kept abreast of latest developments in the $8.2bn Washington Mutual bankruptcy case.

Microsoft filed the notice because it has: "Existing contracts for software licenses and consulting services with Washington Mutual and we want to make sure those contracts are properly administered through the bankruptcy process," a company spokesman told The Seattle PI's Joseph Tartakoff in the wake of the filing.

Microsoft's business with big institutions uses annuity-based licensing, where payments on products like Windows or Office - are spread out to make billing easier for the customer and to ensure Microsoft has guaranteed income over a number or years. US Chapter 11, though, shields companies against paying creditors such as Microsoft while they devise a plan for reorganization.

Given Microsoft counts most investment and retail banks among its customers, it's reasonable to assume Lehman Brothers is also a major Microsoft customer. Also, there will be other institutions running Windows who - while not filing for protection - have been succumbing to acquisition or are looking weak.

That's going to create uncertainty over when and how Microsoft gets paid for existing contracts. And if Microsoft is concerned about Washington Mutual, then it'll be worried sick by Lehman's, America's biggest ever bankruptcy filing - bigger than WorldCom, bigger than Enron.

Asked by The Reg if it was a filing similar motion on Lehman, a Microsoft's spokesman said the company "routinely participates, by filing notices of appearance and other pleadings, in all bankruptcies in which Microsoft is either a creditor or has contracts with the bankrupt entity."

He refused to say which cases Microsoft is filing in. ®

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