Since we are in my home state, I have learned the hard ways sometimes on the intricacies of bankruptcy law.
Here is the run-up to the law, so that it will begin to make sense to you (I hope).
In the 1980's oil prices totally bottomed out, reserve values pledged as collateral plummeted and the banks called the loans and beaucoup companies sought protection from creditors by filing for bankruptcy.
There are several stages of bankruptcy. Lots of reading will show you the difference. I think that the book begins at Chapter 11 and ends with Chapter 7.
Royalty owners found that, if the bankrupt company owed them royalties, they were classified as unsecured creditors and had to fight with other unsecured creditors of the company over limited funds (if any) to recover their royalties.
A lawyer friend of mine told me at the time, his business was always booming. If there were not any typical or standard oil and gas work to be done, he always had the bankruptcies. And the attorneys are paid first. Fancy that.
As a result, the Texas Legislature passed a new statute, now Section 9.343 of the Texas Business and Commerce Code, which grants to royalty owners a security interest in production from their well, and in the proceeds of sale of production, to secure the payment of their royalties. Royalty owners do not have to make any filings or do anything in advance in order to have the protections of this statute. Its effect is to make the royalty owners secured creditors in the bankruptcy case of the company that owes them royalties. If the company still has funds in its account that represent proceeds from the sale of production, you would have a claim against those funds superior to unsecured creditors of the company. The statute has been upheld and enforced in bankruptcy proceedings.
If the company that pays your royalties files for bankruptcy, you will receive a notice of that filing, as a creditor of the company. Typically, the notice will classify you as an unsecured creditor. In order to take advantage of the protection provided by Section 9.343, you will have to file a claim asserting your secured status. This will probably require the help of a bankruptcy attorney. I was in that situation before and clients of mine are in that situation now and that is what we did. It puts us at the head of the line to be paid, after the lawyers, court costs, special masters, etc.
If you receive the royalty from the purchaser rather than the operator, there are some changes to the above.
Get a lawyer and save the grief. There are just some things that lawyers can do that us regular folk can't. This is one of them. Believe you me.