Yes! You Can Do That!

Transcription

1 Yes! You Can Do That! Lynnette R. Warman Culhane Meadows PLLC Attorney 100 Crescent Ct., Suite 700, Dallas TX Kenny Wine, CCE Joseph T Ryerson & Son, Inc. Director of Credit South/East 7701 Lindsey Road, Little Rock, AR Phone: Kenny.Wine@ryerson.com ww.ryerson.com

2 Can I do this? How do you get to yes? Credit managers juggle a lot of responsibilities Must make decisions quickly, often without time for research What are some best practices to use to beat the stress & save the day?

3 First, try to identify the different parts of the problem: Business Issues: Terms Costs Must you get authority to approve How large is the customer? How will this affect other customers? Legal Issues: If you say yes, are you changing the legal rights of the company? Does it involve a release of claims? Does it involve the delay of asserting rights? Are you being asked to match a deal given by another supplier?

4 Second, decide whether there is a policy in place that applies to this issue/problem/opportunity. Business side Insist on strong credit application Develop policies to deal with common credit issues Enforce the policies Review and update policies from time to time Learn from your experiences! If you have a policy & it applies to the problem use it. Unless there is a good reason not to. Legal side If you apply existing policy-and that resolves the issue, no need to go further. If you call lawyer May ask about policies and will ask to see them in written form Needs to know all of the facts to give good advice. Even if less than favorable.

5 If policy didn t apply, or you re not sure you want to apply it, what next? Take the afternoon off?? Gather up all relevant info Write out the problem in a way that makes sense to you Write out the proposal from the customer and the response you think is appropriate under the circumstances Once you are satisfied with it, put it into an , attach all the documents to the that you needed to review to put the together & send to your boss and legal counsel (or ask permission to send to legal)-follow procedure Tell the customer you escalated their request & consider leaving early.

6 Best Practices to get to YES We Can Do That! Let s look at some common scenarios where issues come up Slow Pays Wind downs Industry Stress Company stress Economy stress Bankruptcy

7 Slow Pays/Wind downs by customer Recognize the signs of distress that lead to slow pays & wind downs Increasing delays or sporadic payments New people answering the phone Complaints about the bankers Fire sale pricing-check their websites often!

8 What can you do? Lower credit limits Put on ACH prepay Stop shipping-check terms of POs or contract Get promissory note for past due Ask for collateral to secure that note Ask for corporate or personal guaranty Use purchase money security/consignment/file UCC If a guaranty is in place-make a demand for late payments

9 Can you stop a shipment that is on the road? Yes you can! The UCC gives you the right Allows you to stop shipments Follow the rules May want legal help the first time

10 What are the legal requirements to stop delivery? Seller's Stoppage of Delivery in Transit or Otherwise. (1) The seller may stop delivery of goods in the possession of a carrier or other bailee when he discovers the buyer to be insolvent (Section 2-702) and may stop delivery of carload, truckload, planeload or larger shipments of express or freight when the buyer repudiates or fails to make a payment due before delivery or if for any other reason the seller has a right to withhold or reclaim the goods.

11 How late can you stop delivery? (2) As against such buyer the seller may stop delivery until (a) receipt of the goods by the buyer; or (b) acknowledgment to the buyer by any bailee of the goods except a carrier that the bailee holds the goods for the buyer; or (c) such acknowledgment to the buyer by a carrier by reshipment or as warehouseman; or (d) negotiation to the buyer of any negotiable document of title covering the goods.

12 Notice is key. (3)(a) To stop delivery the seller must so notify as to enable the bailee by reasonable diligence to prevent delivery of the goods. (b) After such notification the bailee must hold and deliver the goods according to the directions of the seller but the seller is liable to the bailee for any ensuing charges or damages. (c) If a negotiable document of title has been issued for goods the bailee is not obliged to obey a notification to stop until surrender of the document. (d) A carrier who has issued a non-negotiable bill of lading is not obliged to obey a notification to stop received from a person other than the consignor.

13 Can you identity stresses that might affect customers? Yes, you can. Industry trends Geographical trends US economy World economic forces

14 Can you stay informed! Yes you can! NACM groups NACM credit reports Google searches-set them up automatically Industry Economy geography Google Earth Call on the customer personally Ask sales to talk to client Talk to your sales people Talk to the customer regularly

15 Can you find out about a bankruptcy filing? Yes you can! Sign up for a notice service Use NACM for notice Google the company name and the words chapter 11 or chapter 7 Use Pacer Call the most likely court Ask your lawyer to check Always verify an alleged filing

16 Can you manage the case? Yes, you can. Check for preference related information Did they pay late for the last 90 days? Is there a promissory note? Did you get a security interest? Did you change payment methods? Gather documents together Calculate any exposure

17 Can you sell to a customer after they file chapter 11? Yes, sometimes you can, sometimes you must. If you have a contract in place at the time of filing-must comply by shipping or performing immediately after filing & get legal advice about how to proceed. If no contract in place-not required to ship or perform. May ship or perform if you can reach an agreement on terms & there is money to pay you that you can verify.

18 Can you get paid on pre-petition claims? Yes you can-sometimes. Critical vendor status: Are your goods special? Are your goods cheaper? Are they available soonest? Do you have a contract? Special rules for goods: Did you deliver goods within 20 days of the filing?

19 Can you actively participate in a chapter 11? Yes you can. Serve on a creditors committee Acts as a check on the debtor Expenses for committee counsel and your attendance are paid by debtor You get access to sensitive financial information Can often negotiate better terms for unsecured creditors Courts really appreciate and rely on credit managers

20 Can you get to Yes I can do that and feel confident? Develop good written credit practices Develop sound written credit policies Develop good internal processes that everyone understands Make sure everyone follows policy & procedure Insist on strong credit applications Put all agreements with customers in writing & get all needed approvals Act quickly if a bankruptcy is filed Figure out if you must or may perform on any existing contract Join the committee if you can Ask about critical vendor status Assert any 20 day claim File your claim on time