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Our Subscribers Say...
I think Credit Today is fantastic. You cover many practical topics in the credit field that I use regularly. Just one recent example—a conversation on the ListServ about preferential payments—gave me tips that I used in an actual case. The specific information I picked up from this one discussion saved me $10,000, enough to cover my membership for many years!
- Steve Savino
Manager of Credit & Collections, ASSA Abloy Americas Division, New Haven, CT
Credit Today's Resource Directory and their online e-mail forum (ListServ) provide information on almost any credit-related topic you can think of. It is a great way to exchange information with other credit professionals. As the saying goes, "You don't know what you don't know."
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Credit Manager, Big Lots Stores, Inc., Wholesale Division
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"Being a part of the Credit Today online community is like having the expertise of hundreds of credit managers at your fingertips. These credit execs are willing to help you solve topical business issues as they arise. In the current environment of ever increasing competing priorities which reduce our opportunities to meet peers out of the office face-to-face, this is the most valuable tool you can have on your desktop! It's important that we have a mechanism to reach out to our counterparts quickly to exchange knowledge as well as to stay on top of industry trends."
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The Credit Today ListServ has become the pre-eminent online forum, providing an opportunity for discussion and comments (and occasional humor) from an impressive list of credit professionals."
David Dungan, Director of Credit
Justin Brands, Inc. (A Berkshire Hathaway company)
Fort Worth, Texas
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Ron Woods
Corporate Credit Manager-World Wide
Thales Navigation, Inc.
"The newsletter, coupled with the website and the ListServ, are to us, more valuable than any other credit publication, bar none. I try to use at least one article out of each newsletter for departmental training/discussion sessions."
D. Mark Constantine
Corporate Credit Mgr
Fulton Paper Company
"I love Credit Today and read every issue cover to cover. For me, the greatest perk of a subscription is ListServ. I believe Credit Today's ListServ members may be the most knowledgeable Credit brain trust in existence today. I have saved and categorized hundreds of contributions on a wide variety of topics which I refer to often. It's an easy and cost effective way to network and learn."
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Kimberly-Clark Customer Financial Services |
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Legal Issues Today
That the law governing credit is complicated comes as no surprise to credit managers. Credit Today is unsurpassed in explaining complex legal issues and translating often obscure legal language into terms that shed light instead of shadow. Here's what you need to know about liens, contracts, personal and corporate guarantees, UCC issues, security interests, PMSIs, battles of forms, managing lawsuits, antitrust issues and much more!
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Owners Lose Their Jobs Along With Their Business--Does That Cancel Their Personal-Guarantee Obligations?
By Ann Morales Olazábal
Because a bank held a perfected security interest in all of Jaeger Construction Supply's (JCS's) existing and after-acquired inventory, Credit Manager Jim Nugent of Tri-Am Building Supply never tried to secure the products he sold JSC on open terms. But, in 2009 and again in 2011 when they were executing new applications for credit, he did have both Scott and Sherry Jaeger, the co-owners, execute personal guarantees intended to assure repayment of the JCS account. This legal case study examines whether or not extreme hardship gives a debtor a legal excuse to avoid honoring a personal guarantee. We also take a look at the concept of "supervening impossibility" - in which an event or circumstance materializes after a contract is entered that renders performance by one or both parties objectively impossible - and what this means for the credit manager. . . .
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Wow - Talk About A Costly Miscommunication!
Rene Sacasas
In his search for a surge protector, Stuart Computer Owner Ralph Stuart ran into bewildering range of prices--from $20 to $300. None seemed quite right for his needs, however, so on the advice of a colleague, he contacted Brill Manufacturing, a surge . . .
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When Can Your Customer's Customers Become Your Customers?
By Ann Morales Olazábal, MBA, JD
When relationships go sour, sometimes they really go sour. For years PRL--a big American manufacturer of mining and extraction equipment--had had a great informal distributorship arrangement with Chastain, a regional seller of spare parts and attachments primarily to mining and construction companies. PRL would sell and deliver to Chastain, who then sold to its third-party buyers or, at Chastain's request, PRL would drop ship directly to Chastain's customers. The relationship was mutually lucrative for years. This case study examines a situation in which a supplier starts selling directly to its former customer's customers. Is this going to cause the top supplier any legal problems. What are the issues at stake? . . .
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"I Have Your Word!"
By Ann Morales Olazábal, MBA, JD
During August of 2012, two shipments valued at approximately $200,000, handled by TriState Transport for Colby Electronics, were destroyed en route. Tristate disclaimed responsibility, but continued handling Colby's shipments, and between September 1 and December 30 Colby ran up a large unpaid balance with Tristate. Ultimately, Colby ran up a large bill with TriState and claimed that a TriState employee had promised (in contrast to their written Credit Agreement) that Colby would not owe interest on past-due balances and also could pay in 60 to 90 days. What do you think happened? What are the legal principles governing this situation? Read on to find out! . . .
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It's Complicated: Revisiting BIG3D and DEICO's Inadequate Guidance for Adequate Protection
Johnny White, Esq.
The undefined phrase "adequate protection" appears in several key provisions of the bankruptcy code, and the success or failure of an attempted restructuring often hinges on the question of whether "adequate protection" exists. Crudely put, the thrust of the concept is that a debtor may not use a secured creditor's collateral without compensating the secured creditor for any loss of value arising from the use of the collateral during bankruptcy. While this notion is easily stated, how it can and should be applied is a vexed question. One issue on which the respective bankruptcy courts have diverged is when adequate protection payments should begin. That is, assuming a secured creditor can show the value of its collateral is declining, when should it start receiving payments to compensate for this? . . .
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A Quicker, Cost Effective Alternative to a Lawsuit
by David Greenberg
Move your receivable disputes out of the courtroom and into the conference room -- and you could drastically cut your international litigation budget! Opting to go with Final and Binding Arbitration not only reduces expenses -- it can speed up your recoveries as well. . . .
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Self-help to Setoff a Delinquent Account: A Reminder of Legal Boundaries
By Scott E. Blakeley, Esq.
The recent chapter 11 filing of clothing retailer Betsey Johnson (debtor) and the lawsuit filed against one of its vendors reminds the vendor of the legal limits, as well as the legal boundaries, of the self-help strategy of setoff. Where the credit professional may not be able to obtain a credit enhancement or payment alternative and the customer breaks their promise to pay on terms, a credit professional may consider a more creative approach to collect the delinquent account.The credit professional may try to reduce a delinquent account through a self-help strategy, such as selling a customer's inventory held by the vendor to specially manufacture the customer's product as a way to offset past due invoices of the vendor. . . .
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Garnishing An Out-of-State Bank Account? Yes, It May Be Possible
Bradley D. Blakeley, Esq.
Judgment creditors often face the issue of whether they can levy on the bank account of an out-of-state judgment debtor. In a common scenario, a judgment creditor, often through its a forum-selection clause in its credit application or contract, obtains a judgment in their home state against an out-of-state judgment debtor. Using the judgment debtor's checks, credit application or perhaps a third-party service, the judgment creditor confirms that the judgment debtor uses a bank with branches in the judgment creditor's home state. Now the question for the judgment creditor is can it levy on the bank in its home state? . . .
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Can the '20-Day' Rule Spare You From Preferential Payment Liability?
By Ann Morales Olazábal, MBA, JD
Momentous Distributors' bankruptcy filing came right out of the blue for Chait Industries's Credit Manager Janet Taylor. In fact, she'd thought things had begun to look better for Mometous. And now here she was with something over $170,000 owing from them, and all of it within the past 90 days. She was calculating what Chait's hit would be in preference payments when a colleague suggested there might be some relief under what he called the "20-day" rule. "As I understand it, deliveries made within 20 days of the filing are not considered preferential," he told her. . . .
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Customer Excuse: Does He Have a Leg to Stand On?
Credit Manager Tom Wright was skeptical about Sam O'Brien, a new prospect being touted as a potential major customer by the sales rep. O'Brien Distributors, Inc., was clearly a fast growing operation and current suppliers were reporting good payment . . .
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California's New Mechanic's Lien Statute: The Basics
Johnny White, Esq.
On July 1, California's new mechanic's lien statute came into effect, marking the culmination of a 13-year long project to improve the law. The law was passed in September 2010, but its implementation was delayed to allow the construction industry to digest the key changes, and prepare itself. You may have taken heed of the forthcoming changes months ago, and were able to seamlessly integrate the new provisions in to your business practices when the clock struck midnight on July 1, in which case you can stop reading now. But if you were unaware of the change, or are still coming to terms with the new law, here are a few of the key points. . . .
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'Your Inventory Lien Has Expired!'
By Ann Morales Olazábal, MBA, JD
Sheffield & Vaughan is a North Carolina manufacturer of heavy equipment. Dominguez is a seller of forklifts and other materials handling equipment, doing business in the U.S. Commonwealth of Puerto Rico. In late 2004, Sheffield & Vaughan entered into a Distributorship Agreement with Dominguez under the terms of which Dominguez would market and service certain Sheffield & Vaughan products. The parties also entered into a floor planning agreement that would enable Dominguez to purchase inventory from Sheffield & Vaughan under a credit facility. This case study takes a look at a situation in which a debtor files for Chapter 11 and claims that a creditor's lien is no longer valid because their contract states that the creditor's state will be used to govern all facets of the parties' relationship, and perfection for a lien filing has expired there. You might be surprised at the outcome and reasoning here, which examines the concept of perfection. . . .
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The Business Is Between Friends, But the Credit Manager Is in the Midddle
by Ann Morales Olazábal, MBA, JD
Underwood Windows normally sells only to building contractors, but Credit Manager Janine Francois is now looking at a special order. Marie and Jonathan Brent, who are acquaintances of the Underwood family, are renovating a large old home and replacing all of the windows. They are using a general contractor for their project, but they want to purchase the windows directly from Underwood at a discount, and their contractor has agreed to install them at an hourly rate rather than to charge them the usual rate of cost plus 20%. . . .
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Piercing the Corporate Veil: Fact or Fiction
By Dean Kaplan
We frequently get asked by new clients about piercing the corporate veil on owner-operated companies that go out of business owing money. Everyone's heard about someone else piercing the veil to create personal liability for business debts and getting paid. These 'stories' make it sound simple and a highly effective method for recovering receivables. . . .
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Are shipments that are Cash in Advance considered preferences
November 13, 2012
It's understood that any payments received on account within 90 days of their filing bankruptcy is considered a preference payment. Are shipments that are Cash in Advance considered preferences as well? I'm thinking CIA is not preference because it was not on an existing debt. . . .
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The Buyer's Inspection Period: A Cautionary Tale
By Ann Morales Olazábal, MBA, JD
After years of satisfactory relations and on-time payments, the Callista Seeding & Sodding Company account had become a problem. Sixteen invoices for $112,000 worth of seed and $42,000 worth of related non-seed products sent between September 2008 and February of 2009 had gone unpaid, so General Ag Credit Manager Jeff Tromley phoned Paul Callista. "I expected to be hearing from you," Callista told him. "The seed you sent was worthless." This case study examines a situation in which a buyer claims the goods it received much earlier were worthless and thus they don't owe their supplier. We take a look at the relevant parts of the contract and the Uniform Commercial Code governing such a dispute. . . .
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Bankruptcy Issues
