Program Overview for NACM Legal Workshops
Wanda Borges, Esq.
Bruce Nathan, Esq.
Each NACM Legal Workshops focuses on a different topic affecting the credit profession. To give you an idea of what is covered in our various workshops, please review the topics below.
||Credit Applications||Risk Mitigation|
Every credit executive dreads dealing with a financially ailing customer and the risk that it will file bankruptcy. This Workshop offers a practical approach to provide the credit executive guidance on the precautionary steps to protect itself and enhance the likelihood of payment of its claim against a financially struggling customer before, during and after its bankruptcy filing. Topics that will be covered include the following:
1. Warning signals of a customer’s financial problems and the risk of its future bankruptcy filing
2. Sources of information that identify a troubled customer facing the prospect of a future bankruptcy
3. Credit enhancement devices to increase the likelihood of payment
a. Selling on consignment or secured basis (with emphasis on purchase money security interests)
b. State and federal lien and trust fund statutes, including PACA and PSA and builders trust fund
c. Setoff and recoupment rights where trade creditor and its customer have claims against each other
d. Third party support: documentary and standby letters of credit
e. Third party support: guarantees and third party collateral securing guarantees
f. Third party support: credit insurance and put rights and sale of claim
4. State law remedies mitigating risk of nonpayment:
a. UCC remedies allowing for switch from contractually binding credit terms to cash in advance or more restricted credit terms
b. UCC remedies allowing for reclamation of goods or stoppage in delivery
Voluntary and involuntary bankruptcy filings and the risk of joining an involuntary bankruptcy petition
First day orders
Selling to a chapter 11 debtor: the risks and claim priority status
Critical vendor treatment
Section 503(b)(9) 20 day goods priority
Reclamation rights and pitfalls
Executory contract issues
Chapter 11 plan process
Preference claims and defenses
Differing means of concluding a case via confirmed plan, conversion to chapter 7 or dismissal of case
Timing of emergence based on confirmed plan
Treatment of post-confirmation claims and credit risk
Credit Applications Workshop
From the moment a potential customer approaches your company seeking credit and other terms, the diligent credit executive must be ever mindful of the multiple functions that can be performed by a well-drafted credit application. A credit application is not only a useful source of information for evaluating the prospect's credit, but also provides a wealth of information that can be used to collect your company's claim from a customer that later hits dire financial straits.
This workshop is geared toward examining the recommended contents of a credit application, and the impact of various laws, such as antitrust, ECOA, FCRA, FACTA, and the UCC. Legal issues relevant to credit applications are also examined including the means by which a credit application can become a binding contract containing favorable terms and provisions to your company that can enhance ultimate recovery of your company's claim.
Participants will also be urged to send in their company's credit applications on an anonymous basis so that relevant terms can be discussed.
Despite every diligent effort and safeguard, it is inevitable that at some point in one's career, each credit executive will find themselves encountering a customer's bankruptcy. Often this happens with no advance warning. Sometimes, the creditor has time to take precautionary steps to protect itself once the bankruptcy has been filed. This workshop is intended to be a soup to nuts approach on the Bankruptcy Code and the changes resulting from the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. The program will include discussions on the impact of a trade creditor's ability to collect its claim and a creditor's resources to evaluate whether to extend credit to a debtor in bankruptcy.
The Bankruptcy Program's primary focus will be:
Bankruptcy Nuts and Bolts: A Quick Guide to the Basics in Bankruptcy
Automatic Stay and Discharge Issues
Claims issues (including priorities, claim filings, deadlines, objections)
Secured vs. Unsecured Claims, including state and federal lien and trust fund rights that enhance the ability to collect a claim: the do's and don'ts
Essential Vendor Treatment
Reclamation Rights and Pitfalls
"20 day" Administrative Claim
Executory Contracts: What are they? What to do about them?
Setoff and Recoupment: Hidden Gold
Sales and Puts of Claims: The Risks and the Rewards
Preferences: the Good, Bad and Ugly
Chapter 11 Plan Process
Non-bankruptcy Alternatives, such as Assignments for the Benefit of Creditors and Out of Court Compositions
The Bankruptcy Program will also touch upon:
Voluntary vs. involuntary bankruptcy
The risks to an involuntary petitioner
The new obligations of Creditors' Committees and how they are being handled
The benefits and risks of selling to a chapter 11 debtor (is a priority administrative claim enough or should you seek enhancements?)
Exceptions to Discharge
Questions and participant interaction are encouraged.