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Business Insolvencies Trend Downward in Most of Eurozone

Business failures are on the decline among certain major players in the eurozone, with economic growth in some buoyed by household consumption and a rise in employment. The credit risk situation across the countries of Western Europe is mixed, with generally good readings for agriculture, food and chemicals/pharmaceuticals sectors.

According to recent country reports from credit insurer Atradius, business failures in Germany have decreased annually with that nation’s consistent economic performance since 2010, though creditors’ outstanding claims have increased as larger businesses more relevant to the economy have failed. No substantial insolvency decrease is expected in 2017. Private consumption is the main driver for growth, with the economy sustained by household spending and lower unemployment. Growth in exports is expected to expand this year with an increase in global demand. The credit risk situation in Germany is good for construction and machines/engineering and excellent for chemicals/pharmaceuticals.

Productivity remains a problem in the manufacturing sector in France. Overall growth is expected to remain below the eurozone average. Decreasing unemployment should help private consumption, however. The number of business insolvencies was about 5% higher than before the start of the credit crisis in 2008. There has been a sharp increase in public debt, with public spending the highest in the eurozone despite some austerity programs, Atradius said. The country’s credit risk situation is poor for construction and agriculture and excellent for chemicals/pharmaceuticals.

In Italy, corporate insolvencies decreased in 2015 and 2016 after experiencing annual increases between 2008 and 2014, reflecting the county’s weak economic conditions. A further decline is expected this year, though poor payment behavior continues to plague liquidity conditions for Italian businesses. The credit risk situation is recorded as bleak in construction, fair in agriculture and good in automotive/transport and food.

In Spain, business failures are expected to decrease by 8% this year, reflecting the economic rebound the country has enjoyed since 2014, though they remain at a high level. The country’s economic rebound is expected to continue in 2017, with strong household consumption and increases in employment. Deleveraging of corporate debt continued in 2016, but remains above eurozone averages. The credit risk situation is Spain is poor for construction and metals and fair in agriculture.

Business insolvencies in certain industries in the U.K. are expected to increase from the enduring uncertainly about the nation’s break with the European Union, though the currently high insolvency level is predicted to decrease this year overall. The credit risk situation is poor in metals and construction, with good ratings recorded for agriculture and chemicals/pharmaceuticals.

For the rest of the region, business insolvencies are expected to decline in Denmark, Ireland and the Netherlands, level off in Belgium and increase in Austria, Sweden and Switzerland.

 

FCIB

Do You Have the Essential Tools for International Business?

FCIB Worldwide Credit Reports

FCIB Credit Reports go beyond the numbers, providing in-depth personal and operational information about your customers and prospects that is vetted, validated and verified. FCIB adds value by using multiple providers—in fact, the best provider, on-the-ground in a region. FCIB checks to see that the subject is who they say they are. The more you know, the better your credit decision will be.

PRS Country Reports

PRS Country Reports help you manage the risk from global market uncertainty by digging beyond the headlines to give you a comprehensive, fact-based view of the economic and political risk of doing business in a particular country. Each report provides 18-month and five-year forecasts for turmoil, investment, transfer and export risk in 100 countries, plus in-depth coverage of relevant political and country risk events, country conditions and independently back-tested methodology sourced by the IMF.

Political Risk Newsletter

The “best in class” monthly Political Risk Newsletter, written by the PRS Group and available to members through FCIB, provides concise, easy-to-digest briefs on up to 10 countries, with additional recaps updating prior month’s reports. Each month’s Political and Economic Forecasts Table covers 100 countries, with 18-month and five-year forecasts for KPIs such as turmoil, financial transfer and export market risk.You’ll also find rating changes, providing an excellent method of tracking ratings and risk, for the countries you’re exporting to.

FCIB and NACM members receive a 10% discount on PRS Country Reports and the Political Risk Newsletter.

To learn more, visit www.fcibglobal.com.

Construction Prompt-Payment Statutes Popping Up in Canada

Subcontractors and suppliers in Canada tired of slow payment from their clients are helping advance prompt-payment legislation at the federal and provincial level.

At the federal level, prompt-payment legislation that would impact federal construction projects supported by the Mechanical Contractors Association of Canada recently passed the Senate, according to the Engineering News-Record. The U.S., U.K. and the European Union have passed prompt-payment legislation already, and many subs and suppliers in the Canadian construction industry consider prompt payment the issue that needs to be addressed, said Chad Kopach, Esq., partner with Blaney McMurtry LLP in Toronto. The Mechanical Contractors Association found subs on average wait 120 days for payments.

While many political parties appear to support the prompt-payment legislation on federal projects, it still has to pass through the House of Commons—an unusual circumstance in that most federal legislation is initiated in the House of Commons and moves to the Senate, Kopach said.

Perhaps more meaningful for suppliers and subs is construction reform legislation wending its way through the Ontario provincial government that includes new prompt-payment provisions, he said. This bill, which according to the Engineering News-Record could be introduced in June and signed into law next year, would involve both public and private projects in the province—a likely greater pool of construction projects than just federal construction jobs.

The Ontario bill would mandate 28-day payment from the owner to the general contractor (GC) upon receipt of a proper invoice, with a seven-day window after receiving the invoice to note any disputes, Kopach said. The GC would then have seven days to pay the sub and the sub seven days to pay suppliers, and so on. Further, the bill would introduce an adjudication provision—similar to arbitration—that would see disputes resolved with a binding decision within 42 days. Parties would, however, still be able to sue in court on payment disputes. Subs and suppliers would also be able to file and perfect liens.

Alberta Infrastructure began last year to introduce prompt-payment clauses in its contracts, while in Quebec, government officials have said they plan to apply prompt-payment rules to public construction projects this spring, the Engineering News-Record said. British Columbia is also looking at reforming its construction statutes.

“There seems to be a real push to get this out there,” Kopach said.

 

Credit Learning Center

The Best and Least Expensive Way to Train Credit Professionals

The Business Credit Principles course has been completely rewritten and revamped! It covers all the basic essentials for business credit, such as the role of credit in financial management, governmental regulations that pertain to business credit, credit and policy procedures, the Uniform Commercial Code and much more. It fulfills a CBA designation course requirement.

Look for other relevant business credit topics geared to improve job performance as well, including Financial Statement Analysis, Commercial Collections and Bankruptcy and Construction Credit, or prepare for certification with Designation Exam Reviews.

It's knowledge and training at your convenience when you sign up for courses in the Credit Learning Center. Choose the subject and learning module you want and learn at your own pace—wherever and whenever works for you.

Get started here or contact the NACM Education Department at 410-740-5560.

Team discounts are available for groups of five or more!

ICC Calls on UN to Address Trade Finance Shortfall

The International Chamber of Commerce (ICC) is asking the United Nations (UN) to alleviate a major shortfall in short-term world trade financing.

More than a third of world trade is completed with bank-intermediated transactions, according to the ICC. This is equal to trillions of dollars per year, and the short-term financing is at a $1.6 trillion shortfall. This difference impacts small- and medium-sized enterprises (SMEs), which are 95% of all companies. Nearly 60% of trade finance applications denied by banks are SMEs, meaning small businesses and entrepreneurs are “particularly impacted by this trend,” said the ICC.

The ICC has called for the UN to address the issue at this week’s Financing for Development Forum in New York. The Chamber asked forum participants “to commit to an urgent UN-led review of the trade financing gap with a particular focus on possible means to reverse the on-going erosion of international correspondent banking networks.”

The UN recognized the trade finance shortfall at the 2015 Addis Ababa Action Agenda. A “lack of access to trade finance can […] result in missed opportunities to use trade as an engine for development,” said UN members according to the ICC’s release. The shortfall is not a recent issue. The gap has expanded since the peak of the financial crisis.

One of the main reasons for the gap is due to global financial crime regulation. ICC recognizes the need for precautions, but “the increasing complexity of global financial crime regulation—and associated regulatory and reputational risks—has resulted in banks adopting an extremely cautious approach to managing risk and as a consequence they are reducing and exiting certain types of business.”

Many large banks have cut back on banking relationships with counterparts in other countries due to issues involving criminal activity that could expose them to sanctions. Correspondent banking relationships (CBR), which are bilateral agreements built to establish services such as international payments or letters of credit, have decreased by more than a quarter in the last seven years, according to a recent study by Accuity.

The phenomenon has been attributed, at least in part, to de-risking or the notion that large financial institutions have been driven from the market, at least in some geographies like the Caribbean, as a result of a series of regulations since 2008 that mandate higher levels of transparency, higher levels of liquidity requirements for banks and ramped up enforcement of anti-money laundering activities.

Penalties for violations are regularly splashed across global headlines—in 2014, anti-money laundering fines reached about $10 billion—and have led banks and other financial institutions to abandon otherwise viable business opportunities rather than spend too heavily on compliance, the Accuity report notes.

“If we want to reverse this trend and begin to ‘re-risk’, then the ‘antidote’ will require more granular level due diligence and proper risk assessments to provide large clearers with the confidence that they can deal with low-risk businesses in high-risk jurisdictions,” Balani said.

 

mechanics lien, bond services, mechanics's liens

You Have Questions

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NACM's Lien Navigator

Credit professionals rely on the Lien Navigator. It will guide you through the entire process. It determines when and how action needs to be taken to protect lien rights across the 50 states, Washington, DC and Canada. The real-time Navigator ensures that you’ll always have current information. Specific questions are also answered for subscribers through the Navigator Answer Line.

For more information, call Chris Ring at 410-302-0767 or visit www.nacmsts.com.

Effective Cybersecurity for Credit Professionals

With more than 200,000 computers infected in 150 countries within the span of a weekend, the so-called WannaCry ransomware attack put cybersecurity back in the headlines, though it seems it hardly left them. With ransomware the fastest-growing malware threat to computer systems, according to the U.S. government, it behooves credit professionals to ensure that company networks and payment systems are protected from that or any other threat.

Cyberattacks may hold particular risk for credit professionals as payment systems move from paper to more electronic forms, not only in transmission of such payments but in the storing of card and payment data, related Scott Blakely, Esq., of Blakely LLP, who will be a co-presenter on payment channel alternatives at NACM’s 121st annual Credit Congress & Expo this June. “It is one of the key issues that payment teams will face in coming years,” he said.

The reason the WannaCry attack was successful was that it was able to exploit vulnerabilities in old computer operating systems. Credit professionals leave themselves open to criminal activity if using systems that are not up-to-date. “It is not uncommon for small- to mid-size companies to have old operating systems and to be at greater risk to these types of cyberattacks,” Blakely said. He added that hackers are looking across industries, regardless of company size, for opportunities to exploit. It is not just Fortune 500 companies that are targeted.

As credit teams try to accommodate the desire to accelerate the speed of payments, there is a greater risk that this kind of information will be attacked, especially since card payment is emerging as a preferred way to pay customer invoices, Blakely said. Wire forms of payment are also vulnerable.

A best practice in terms of reducing risk in storing forms of payment is to look to third parties to hold that information in a cloud-based system, Blakely recommended. Cloud technology is updated easily and automatically and incorporates built-in constraints to block intrusive software.

Ransomware is malware that targets computer systems for the purposes of extortion. It encrypts data until a ransom is paid and is often delivered through phishing (disguised as from a trustworthy source) emails. According to the U.S. Justice Department, prevention is the best defense. Recommended measures include:

  • Implement an awareness and training program, so that employees are aware of the threat of malware and how it is delivered.
  • Enable strong spam filters to prevent phishing emails from reaching end users and use software to authenticate inbound email.
  • Patch operating systems, software and firmware on devices.
  • Manage the use of privileged accounts based on the principle of least privilege, which allows users administrative access only if absolutely needed and those with access to use it only when necessary.

Cybersecurity is at the forefront of concerns among financial institutions, Blakely said, but the technology that is used for such attacks is emerging quickly. In fact, the kinds of attacks he is seeing are advancing faster than what financial institutions can respond to. Though it may get harder and harder to prevent attacks, through best practices and sound decisions, the risks associated with such attacks can be reduced.

 

UTA

Solve Today's Problems with Today's Technology

Whether you're capturing payments in the field with a mobile device, in your own mailroom, through a customer portal or with an existing lockbox provider, United TranzActions can automate the matching of payments to open receivables and process straight through without exception.

Call UTA today at 1-800-858-5256 and start improving your cash flow tomorrow.

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Postponed Los Angeles Football Stadium Opening Illustrates Problems with Construction Delays

Football fans in Southern California will have to wait an extra year to see their NFL teams hit the field in the new stadium outside of Los Angeles. It was announced last week the venue will open in summer 2020 instead of the originally planned 2019, as developers are blaming weather for the one-year opening delay. The privately funded stadium broke ground in November, and roughly six million cubic yards of dirt have been excavated. The foundation for the stadium bowl and roof are nearly complete.

Setbacks to large construction projects like this are “danger signals,” said James Fullerton, Esq. of Fullerton & Knowles PC. Roughly 70% to 80% of the time, weather is not the real problem, he explained. Developers of the California stadium had planned for 30 rain days during the 36-month construction period, but heavy rains in the early part of the year had already doubled the allotted number.

The football teams will not be the only entities at risk of losing money due to the opening delay. Change orders for the setback can hurt general contractors and subcontractors financially. It can also cause the project budget to increase anywhere from 5% to 10%, according to Fullerton.

On a $10 million project, $1 million might not seem like a large sum of cash, but it could be the difference that puts someone out of business. “Where is the money going to come from?” asked Fullerton. Subs and GCs may not have that money on hand to shell out following a delay and increase in project cost. A three-month delay is annoying but not the end of the world, yet it could put subs out of business. That is the scenario Fullerton gave, but near LAX it is a one-year opening delay and a $2.6 billion project, meaning this could have a very large impact even with a cost increase of 5%, or $130 million.

The delay does not directly impact mechanic’s liens, but it might be necessary to file a lien or bond claim if off the job for 75 days, said Fullerton. There is no guarantee the subs or suppliers will be brought back following a delay in construction.

 

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Supreme Court Resolves Circuit Split, Finds Time-Barred Claims Do Not Violate FDCPA

On May 15, the U.S. Supreme Court (SCOTUS) determined that filing a proof of claim for a time-barred debt does not violate the Fair Debt Collection Practices Act (FDCPA). Although the focus of the FDCPA is on consumer debts, trade creditors who hold claims against individual personal guarantors or sole proprietors may take comfort in this decision.

In the 5–3 decision in Aleida Johnson v. Midland Funding LLC, SCOTUS reversed the 11th Circuit Court of Appeals and said that FDCPA considerations “have significantly diminished force in the context of a Chapter 13 bankruptcy.” The Court referenced the fact that in a Chapter 13 proceeding there is a knowledgeable trustee available and that the bankruptcy rules “more directly guide the evaluation of claims.” It relied on the Bankruptcy Code definition of “claim” and that even an “unenforceable claim” is nonetheless a “right to payment,” hence a “claim.”

Further, SCOTUS noticed a clear distinction between the FDCPA and the Bankruptcy Code. It said: “The act seeks to help consumers … by preventing consumer bankruptcies in the first place. The Bankruptcy Code, by way of contrast, creates and maintains what we have called the ‘delicate balance of a debtor’s protections and obligations.’ To find the Fair Debt Collection Practices Act applicable here would upset that ‘delicate balance.’”

Outside of the Bankruptcy Court, if a creditor attempts to pursue payment of a claim after the statute of limitations has run out, the debtor may assert the lapsed statute of limitations as an affirmative defense. Generally, a debtor filing for bankruptcy protection will list all creditors despite the age of the debts. Creditors receive notice of the bankruptcy and an invitation to file a proof of claim. In a Chapter 13 case, it is likely creditors will be paid some percentage of their claims. Proofs of claims filed beyond the statute of limitations’ period have come to be called “time-barred” claims. The question before the Supreme Court was whether, under the FDCPA, filing of a time-barred proof of claim against a debtor in bankruptcy is “unfair,” “unconscionable,” “deceptive” and “misleading.” Other circuit courts, including the 4th, 7th and 8th courts, had ruled that filing time-barred claims did not violate the FDCPA.

In March 2014, Aleida Johnson filed a Chapter 13 petition in Alabama. The $1,879.71 debt to Midland Funding LLC was 10 years old, four years beyond the state’s statute of limitations. Midland filed a truthful proof of claim stating the age of the debt. When Johnson objected to the claim, Midland did not respond and the claim was disallowed. Johnson sued Midland seeking actual damages, statutory damages, attorneys’ fees and costs, claiming that the filing of the proof of claim on the time-barred debt was a violation of the FDCPA. The U.S. District Court dismissed the action saying that the FDCPA did not apply in the context of a bankruptcy proceeding and Johnson appealed that decision to the 11th Circuit.

 

Credit Congress

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Know Your Project Before Filing Notices, Liens on Condos

Colorado is close to adopting a bill that would update its construction defects law, paving the way for what many hope will spur condominium construction in the state as homeowners would have a more difficult time suing builders.

The state legislature recently sent House Bill 1279 to the governor, who is expected to pass the legislation. Lawmakers have been working for years in Colorado to pass a construction-defects reform law; multiple cities and one county have already passed their own ordinances to address the issue in the face of broader legislative inertia. Defects lawsuits have made insurance and financing for larger condo projects more expensive or difficult to obtain, press reports state. In Denver, for instance, the city’s share of the condo housing market has fallen from 20% in 2005—the year the original law designed to protect homeowners from shoddy construction work passed—to 2% today, The Gazette of Colorado Springs reported.

Getting tied up in a multimillion-dollar class-action lawsuit can delay payments to suppliers for months if not years, said Connie Baker, CBA, director of operations for NACM’s Secured Transaction Services.

Under the proposed law, before a homeowner’s association board could bring suit against a developer or builder on behalf of unit owners, it would need to: notify all unit owners and the developer or builder; call a meeting with the developer or builder, who will have a chance to present relevant facts and arguments; and obtain the approval of a majority of the unit owners after giving them detailed disclosures about the lawsuit and its potential costs and benefits.

Suppliers to condo builders in Colorado—or those working on condo projects in other states—need to understand several factors to properly secure their rights to payment, Baker said.

In some states, such as Texas, New York and New Jersey, it’s crucial to know whether the job is commercial or residential, as the deadlines to file notices and mechanic’s liens differ; filing too late for either could mean a supplier will lose lien rights on a job. In some cases, both residential and commercial projects can occur at the same location—again, not knowing which type of job you’re supplying can mean you’ll miss important notice and lien filing deadlines.

Suppliers have to know if the work is being done on common elements within the condo association, Baker said. Common elements are those parts of a condo complex that can be used by all owners, such as corridors, roofs, lobbies, etc. Sometimes notifying a property owner or homeowners’ association and general contractor for work on, say, a roof may be sufficient, she said. In New York, common elements in condos are not lienable. In other situations, suppliers have to send a mechanic’s lien or preliminary notice to all of the individual unit owners when work is being done within the condo units, which can wind up costing hundreds of dollars.

 

Credit Learning Center

The Best and Least Expensive Way to Train Credit Professionals

The Business Credit Principles course has been completely rewritten and revamped! It covers all the basic essentials for business credit, such as the role of credit in financial management, governmental regulations that pertain to business credit, credit and policy procedures, the Uniform Commercial Code and much more. It fulfills a CBA designation course requirement.

Look for other relevant business credit topics geared to improve job performance as well, including Financial Statement Analysis, Commercial Collections and Bankruptcy and Construction Credit, or prepare for certification with Designation Exam Reviews.

It's knowledge and training at your convenience when you sign up for courses in the Credit Learning Center. Choose the subject and learning module you want and learn at your own pace—wherever and whenever works for you.

Get started here or contact the NACM Education Department at 410-740-5560.

Team discounts are available for groups of five or more!

Same Day ACH Sees Growing Adoption

Building upon the Automated Clearing House (ACH) electronic payments network for next-day settlement, Same Day ACH provides credit professionals the option of same-day processing and settlement of ACH transactions. A new survey by NACHA–The Electronic Payments Association, as well as anecdotal information from a recent meeting of the Association for Financial Professionals (AFP), gives insight into the adoption of the system since its launch last September.

Same Day ACH is available for almost any ACH transaction, excluding international transactions and single transactions over $25,000. Use cases include faster settlement of business-to-business invoice payments and faster account-to-account transfers. In the first quarter of 2017, Same Day ACH accounted for about 13 million transactions totaling nearly $18 billion, with volume growing nearly 14% since the fourth quarter of 2016, according to NACHA. Nearly one-third of the volume came from B2B transactions that totaled about half of the dollar amount value.

“NACHA is seeing many businesses opting to make faster payments via Same Day ACH,” said Bill Sullivan, senior director and group manager, government and industry relations for NACHA, when he spoke with NACM.

A meeting of AFP’s Treasury Advisory Group, attended by Sullivan, included an informal poll of the 20 people attending that indicated little adoption of Same Day ACH by treasurers of large corporations, as reported in an article on AFP’s website. Reasons raised include lack of activity on the part of banks, concerns about differences in time zones to fit into the processing window and the $25,000 limit keeping some customers away.

“The $25,000 limit was set as a built-in risk management provision while also enabling the industry to fully understand the impact of the new Same Day ACH capability,” Sullivan said. He added that the processing windows were set so that they end by the time the Federal Reserve settlement service closes, which is on Eastern time. “If the industry wants the dollar limit increased or clearing windows added, we would welcome hearing from them.”

NACHA, which will offer a Payments Help Desk at NACM’s 121st annual Credit Congress & Expo this June, conducted a Same Day ACH survey of 23 financial institutions this past December and January. “The survey showed that this faster payment solution is being implemented by businesses of all sizes,” Sullivan said. Of those surveyed, 84% reported that they originated Same Day ACH transactions for middle market-size companies and 58% for large companies. Nearly all institutions in the survey said they are using Same Day ACH for emergency payments such as payroll, and more than half are using it for one-time payments and to make regularly scheduled payments such as for hourly employees.

“Same Day ACH can be an opportunity to reduce cost per payment received, as well as improve other key metrics, such as days sales outstanding, average days delinquent, collection effectiveness index and cash flow management/cash application cycle time,” Sullivan said.

NACHA offers a Same Day ACH Resource Center with more information for credit professionals. “Same Day ACH is being implemented in three phases, with the first phase completed last September for credits,” Sullivan said. The second phase, for debit payments, will begin this September.

 

FCIB

Do You Have the Essential Tools for International Business?

FCIB Worldwide Credit Reports

FCIB Credit Reports go beyond the numbers, providing in-depth personal and operational information about your customers and prospects that is vetted, validated and verified. FCIB adds value by using multiple providers—in fact, the best provider, on-the-ground in a region. FCIB checks to see that the subject is who they say they are. The more you know, the better your credit decision will be.

PRS Country Reports

PRS Country Reports help you manage the risk from global market uncertainty by digging beyond the headlines to give you a comprehensive, fact-based view of the economic and political risk of doing business in a particular country. Each report provides 18-month and five-year forecasts for turmoil, investment, transfer and export risk in 100 countries, plus in-depth coverage of relevant political and country risk events, country conditions and independently back-tested methodology sourced by the IMF.

Political Risk Newsletter

The “best in class” monthly Political Risk Newsletter, written by the PRS Group and available to members through FCIB, provides concise, easy-to-digest briefs on up to 10 countries, with additional recaps updating prior month’s reports. Each month’s Political and Economic Forecasts Table covers 100 countries, with 18-month and five-year forecasts for KPIs such as turmoil, financial transfer and export market risk.You’ll also find rating changes, providing an excellent method of tracking ratings and risk, for the countries you’re exporting to.

FCIB and NACM members receive a 10% discount on PRS Country Reports and the Political Risk Newsletter.

To learn more, visit www.fcibglobal.com.

U.S. Leveraged Loan Default Rate Increases

With the specter of more energy sector defaults looming and problems continuing in retail, Fitch Ratings has increased its default rate forecast for U.S. institutional leveraged loans. The 12-month trailing (TTM) rate went from 2% to 2.5%, with a particular rise in retail expected by year end.

With $3.8 billion in defaults in energy this year so far, mostly from the Chapter 15 filing of Ocean Rig UDW in March, the expected defaults of Seadrill Ltd. and Pacific Drilling SA this summer could add $3.6 billion of volume to the default environment. Current distress in the industry is focused on drilling service providers, having moved away from exploration and production companies. While fewer defaults in energy are expected this year than in 2016, Fitch projects $8 billion in energy defaults in 2017 compared to $6.4 billion in 2016. The energy default rate will finish the year at 18%, the ratings agency said.

Payless Inc.’s bankruptcy increased the April TTM retail default rate to 1%, and this past Monday’s bankruptcy filing by teen apparel chain Rue21 has lifted it to 1.7%. An impending bankruptcy from Gymboree Corp. could take the retail TTM to 2.7%, Fitch said. The ratings agency forecasts a 9% retail sector loan default rate, on about $6 billion of defaults, by year end. Factors for the gloomy outlook include increased discount and online shopping, as well as shifts in consumer spending toward services and experiences. The retail environment has become extremely competitive. Recently, investors wiped out $4.6 billion of market value in the U.S. department store sector in the largest two-day sell-off in dollars since 2008, according to the Financial Times’ reporting of the S&P department stores index.

“It was not so long ago that analysts dismissed the rise of online sales and pointed out all the reasons consumers would reject the option,” said NACM Economist Chris Kuehl, Ph.D. “It turns out that people will buy anything online. This has steadily chewed into the traditional store’s sales. Shopping has become far more utilitarian. People are just not as willing to spend time and effort in a store.”

The largest name on Fitch’s Loans of Concern list, iHeartCommunications Inc., may add to the U.S. TTM institutional leveraged loan default rate if a likely bankruptcy is filed. Also in the telecommunications sphere, Avaya Inc.’s early 2017 filing, delayed from December of last year, represents the largest nonenergy or metals/mining loan default since the beginning of 2015, Fitch said.

 

UTA

Solve Today's Problems with Today's Technology

Whether you're capturing payments in the field with a mobile device, in your own mailroom, through a customer portal or with an existing lockbox provider, United TranzActions can automate the matching of payments to open receivables and process straight through without exception.

Call UTA today at 1-800-858-5256 and start improving your cash flow tomorrow.

THE RIGHT PRODUCTS

“Buy American, Hire American” Impact Still Unknown

President Donald Trump has signed three dozen executive orders, but none may be more controversial than the one he signed a month ago. One of the main reasons for the presidential executive order on buy American and hire American is to review the H-1B visa program and make sure it is functioning properly.

“The latest executive order has called for a significant review of the H-1B visa program that has allowed many high-tech companies to get access to foreign talent,” said NACM Economist Chris Kuehl, Ph.D. “The industry has complained for years that it does not see enough in the way of domestic talent and therefore needs to go outside the U.S. However, those working in the sector assert that the companies are using that foreign labor force to hold down compensation and that likely explains the shortage of qualified workers.”

“It shall be the policy of the executive branch to buy American and hire American,” said the executive order. But what does that mean, and how is it defined? “The executive order is as broad as it is vague, so, at this stage, it is somewhat difficult to predict how it will shape federal construction projects in the future,” said Amandeep Kahlon, Esq., of national law firm Bradley in its BuildSmart construction blog.

“Increased H-1B enforcement should not significantly impact the construction industry, which does not appear, at present, to rely heavily on immigrant workers who meet the H-1B qualifications, but the move is in line with other steps by the administration to tighten immigration controls that may worsen the ongoing labor shortage in the industry,” explained Kahlon.

Kahlon believes the executive order will increase the price of materials and heighten the risk of material shortages on federal projects. “Higher costs and potential shortages may tempt more fraud and abuse on federal procurement and construction projects,” he said. This means contractors have to be aware of falsely advertised and certified “buy American” materials.

The executive order is structured to enforce laws that have previously been established in the Immigration and Nationality Act, among other places. The president has called for heads of agencies to meet and ensure the laws are implemented and enforced. President Trump set timetables ranging from 60 to 150 days for department secretaries and other leaders to write reports spelled out in the order.

The buy American report “shall be submitted within 220 days of the date of this order [April 18, 2017] and shall include specific recommendations to strengthen implementation of buy American laws, including domestic procurement preference policies and programs,” according to the executive order. The order also sets subsequent dates for future reports.

As of now, the executive order is still in its infancy, but “you can likely expect additional actions once that report is received and evaluated,” said Kahlon.

 

mechanics lien, bond services, mechanics's liens

You Have Questions

What do I have to do? When do I have to do it?

We Have the Answer

NACM's Lien Navigator

Credit professionals rely on the Lien Navigator. It will guide you through the entire process. It determines when and how action needs to be taken to protect lien rights across the 50 states, Washington, DC and Canada. The real-time Navigator ensures that you’ll always have current information. Specific questions are also answered for subscribers through the Navigator Answer Line.

For more information, call Chris Ring at 410-302-0767 or visit www.nacmsts.com.