SELLING TO TROUBLED SUPPLIERS V4_3 (2)
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Transcript of SELLING TO TROUBLED SUPPLIERS V4_3 (2)
SHOULD YOU ALWAYS AVOID LITIGATION?
1. If Possible
2. Minimize The Pain
3. Arbitration Is Not The Answer
Presented by Giarmarco, Mullins & Horton, P.C. Copyright 2005
THE BUYER’S LIFECYCLE
1. Performance Slips
2. Failing or Insolvent
3. Bankruptcy
Presented by Giarmarco, Mullins & Horton, P.C. Copyright 2005
PERFORMANCE SLIPS
1. Ounce of Prevention = Pound of Litigation
2. The Fine Print Now Matters
3. Stay One Step Ahead
Presented by Giarmarco, Mullins & Horton, P.C. Copyright 2005
AN OUNCE OF PREVENTION
1. Avoid Troubled Buyers
2. Don’t Get Surprised
3. Un-Paid Sales Are Worse Than No Sale
Presented by Giarmarco, Mullins & Horton, P.C. Copyright 2005
KNOW YOUR BUYER
1. Why is Performance Slipping?
2. Should You Keep Them?
3. Can You Reduce Your Risk?
Presented by Giarmarco, Mullins & Horton, P.C. Copyright 2005
MANAGE YOUR CONTRACTS
1. Maintain Accurate Contract Files
2. Audit The Terms & Conditions
3. Include The Plant
4. Anticipate Need For Change
Presented by Giarmarco, Mullins & Horton, P.C. Copyright 2005
ACT NOW
1. Be Creative
2. Assess Commitments to the Buyer
3. Expect the Worst
4. Don’t Become “Preferred”
Presented by Giarmarco, Mullins & Horton, P.C. Copyright 2005
PROVEN SOLUTIONS
1. Shorter Credit Terms
2. Other Peoples’ Money
3. Security
4. Solve The Buyer’s Problem
Presented by Giarmarco, Mullins & Horton, P.C. Copyright 2005
WHAT’S THE DEAL?
1. Is There a Blanket P.O.?
2. Existing Releases?
3. Can You Modify or Terminate?
Presented by Giarmarco, Mullins & Horton, P.C. Copyright 2005
DON’T MAKE IT WORSE
1. Watch for New Terms
2. Reject Early & Often
3. Counter With Your Own Terms
Presented by Giarmarco, Mullins & Horton, P.C. Copyright 2005
EXPECT THE WORST
1. Create Flexible Contracts
2. Consider Terminating
3. Perfect Liens
4. Once Again, Be Creative
Presented by Giarmarco, Mullins & Horton, P.C. Copyright 2005
SOME COMMON LIENS
1. Plastic Parts– Molder’s Lien– Mold-Builder’s Lien
2. Metal Parts– Special Tool Builder’s Lien– Special Tool User’s Lien
Presented by Giarmarco, Mullins & Horton, P.C. Copyright 2005
DON’T BECOME “PREFERRED”
1. What is an “Avoidable Preference”?
2. What is Not?
3. Should You Take The Payment?
Presented by Giarmarco, Mullins & Horton, P.C. Copyright 2005
WHAT A PREFERENCE ISN’T
1. Contemporaneous Exchanges
2. Payments in the Ordinary Course
3. Payments in Exchange for Shipment
4. Purchase Money Security Interest
Presented by Giarmarco, Mullins & Horton, P.C. Copyright 2005
REAL SOLUTIONS
1.Don’t Deliver Until You Get Paid
2.Demand C.O.D. or C.I.A.
3.Shorten Credit Terms Early
4.Demand Security
Presented by Giarmarco, Mullins & Horton, P.C. Copyright 2005
THE BUYER IS INSOLVENT
1. Stop Delivery of Goods in Transit
2. Demand Return of Goods
3. Demand Adequate Assurances
4. Stop Shipping
Presented by Giarmarco, Mullins & Horton, P.C. Copyright 2005
WHEN TO STOP SHIPMENTS
1. Buyer Is Insolvent
2. Buyer Threatens to Breach
3. Buyer Fails to Pay on Time
4. No Adequate Assurances
Presented by Giarmarco, Mullins & Horton, P.C. Copyright 2005
RECLAIM YOUR GOODS
1. Written Demand Within 10 Days of Delivery
2. Senior Secured Parties
3. Good Faith Purchasers
4. Goods are Already Incorporated
Presented by Giarmarco, Mullins & Horton, P.C. Copyright 2005
DEMAND ASSURANCES
1. In Writing, But No Magic Words
2. “Reasonable Grounds for Insecurity”
3. Adequate Assurance of Payment Within “Reasonable” Time
Presented by Giarmarco, Mullins & Horton, P.C. Copyright 2005
WHY BOTHER?
1. You May Get What You Ask For
2. Creates Flexibility
3. Prepare For Bankruptcy
Presented by Giarmarco, Mullins & Horton, P.C. Copyright 2005
BANKRUPTCY
1.Do You Have Parts In Transit?
2.Did You Recently Deliver Parts?
3.Must You Continue to Ship?
4.Will You Get Paid?
Presented by Giarmarco, Mullins & Horton, P.C. Copyright 2005
THE BUYER’S LEVERAGE
1.The Automatic Stay
2.The Power to Enforce Contracts
3.The Broad Power of The Court
Presented by Giarmarco, Mullins & Horton, P.C. Copyright 2005
PARTS IN TRANSIT?
1. Stop Shipment
“[M]ay withhold or stop in transit the delivery of the goods…until and unless [seller] is assured of the buyer's payment in cash upon delivery…”
“…stoppage in transit -- need not be preceded by a grant of relief from the automatic stay.”
In re: National Sugar Refining Co.
Presented by Giarmarco, Mullins & Horton, P.C. Copyright 2005
DELIVERED PARTS?
1.Reclaim Them!
2.You Won’t Get The Parts Back
3.So, What Do You Get?
Presented by Giarmarco, Mullins & Horton, P.C. Copyright 2005
WHAT’S AN ADMINISTRATIVE CLAIM?
1.Front of Payment Line
2.Get Paid Sooner
3.Good Chance of Full Payment
Presented by Giarmarco, Mullins & Horton, P.C. Copyright 2005
PAST DUE INVOICES?
1. Unsecured, Non-Priority Claim
2. Better Alternatives?
Presented by Giarmarco, Mullins & Horton, P.C. Copyright 2005
CRITICAL VENDOR
1.Are You Really Critical?
2.Favorable Terms?
3.Convince The Debtor
Presented by Giarmarco, Mullins & Horton, P.C. Copyright 2005
GET THE BUYER TO ASSUME
1. Buyer May Assume or Reject
2. If Assumed, Buyer Must Pay
3. May Need to Force The Issue
Presented by Giarmarco, Mullins & Horton, P.C. Copyright 2005
IN THE MEANTIMECAN YOU STOP SHIPPING?
1. Is The Buyer Really The Buyer?
2. Is Your Contract Really Executory?
3. If So, Buyer May Enforce In Limbo
Presented by Giarmarco, Mullins & Horton, P.C. Copyright 2005
CONTRACTS IN LIMBO
“During the post-petition and pre-acceptanceperiod, an executory contract remains inexistence and is enforceable by, but not againstthe debtor-in-possession.”
Interstate Gas Supply v. Wheeling Pittsburgh Steel Corp.
Presented by Giarmarco, Mullins & Horton, P.C. Copyright 2005
GETTING PAID IN LIMBO
1. Demand Adequate Assurances
“Non-debtor…may only either seek relief fromautomatic stay…to permit it to terminate theexecutory contract or…request the court to fix atime within which the debtor would be required toaccept or reject the contract…”
In re Pac. Gas And Elec. Co.
Presented by Giarmarco, Mullins & Horton, P.C. Copyright 2005
GETTING PAID, CONT.
2. “First Day Orders”
3. Negotiated COD or CIA Terms
4. Administrative Claim
5. Security
Presented by Giarmarco, Mullins & Horton, P.C. Copyright 2005