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Vendors as Lenders of Last Resort
 

Vendors as Lenders of Last Resort

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Information on how credit trade may be indispensable to a financially struggling customer and how the vendor may benefit.

Information on how credit trade may be indispensable to a financially struggling customer and how the vendor may benefit.

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    Vendors as Lenders of Last Resort Vendors as Lenders of Last Resort Presentation Transcript

    • VENDORS AS LENDERS OF LAST RESORT: How Credit Trade May Be Indispensable to a Financially Struggling Customer and How the Vendor May Benefit Scott E. Blakeley, Esq. Blakeley & Blakeley LLP 4685 MacArthur Ct, Suite 421 Newport Beach, CA 92660 Voice: (949) 260-0612 Fax: (949) 260-0613 [email_address] www.bandblaw.com Los Angeles Office (Reply to Newport Office) 515 S. Flower St, 36th Floor Los Angeles, CA 90071 Telephone: (213) 382-0675
      • FIRM PROFILE : Blakeley & Blakeley LLP represents its creditor clients in the areas of creditor rights, commercial litigation and collection, credit documentation, e-commerce, bankruptcy and out-of-court-workouts. B&B’s collective experience and legal and practical understanding of vendors’ rights results in cost-effective representation and develops solutions to vendors’ problems. B&B’s attorneys have extensive experience working with vendors. Members of the firm routinely speak to national industry groups and trade associations concerning creditors’ rights and frequently publish articles in national and regional publications concerning creditors’ rights.
      • Scott Blakeley is a partner in the California law firm of Blakeley & Blakeley LLP, where he advises companies around the country regarding creditors’ rights, commercial law, e-commerce and bankruptcy law. He was selected as one of the 50 most influential people in commercial credit by Credit Today. Scott has published dozens of articles and manuals in the area of creditors’ rights, commercial law, e-commerce and bankruptcy in such publications as Business Credit , Managing Credit, Receivables & Collections, Norton’s Bankruptcy Review and the Practicing Law Institute , and speaks frequently to credit industry groups regarding these topics throughout the country. Scott holds an B.S. from Pepperdine University, an M.B.A. from Loyola University and a law degree from Southwestern University.
    • VENDORS AS LENDERS OF LAST RESORT
      • Introduction
        • Overview and Policy
        • Frozen Credit Markets
        • Declining Loan Balances
        • DIP Financing
        • Extended Credit Terms
        • Reevaluating Credit and Collection Policies
    • VENDORS AS LENDERS OF LAST RESORT
      • Pending and Recent Federal Legislation
        • TARP Reform & Accountability Act 0f 2009
      • Out-of-Court
        • Extended Credit Terms during a Recession
    • VENDORS AS LENDERS OF LAST RESORT
        • Dealing with Unauthorized Deductions and Markdowns:
        • What You Can Do To Protect Your Credit Sales
    • VENDORS AS LENDERS OF LAST RESORT
          • Steps the credit professional can take to minimize deductions
          • Additional risks the new accounts payable audit firms pose to the credit executive with unauthorized deductions
          • How to identify and quantify your deduction problem
            • The accounting and legal issues of deduction management
    • VENDORS AS LENDERS OF LAST RESORT
        • Reducing Credit Lines and Shipments
        • Credit Enhancements to Risk the Hedge of Loss
    • VENDORS AS LENDERS OF LAST RESORT
          • Guarantee: Not preferred
            • Get paid when the customer fails to pay; requires creditor to take legal action
            • May be used as leverage by creditor to fore the customer to pay
    • VENDORS AS LENDERS OF LAST RESORT
        • Security Interests
          • Should entitle creditor to adequate protection
          • Bankruptcy term cash collateral is considered
    • VENDORS AS LENDERS OF LAST RESORT
        • Credit Insurance
          • Avoid loss on a speculative customer, retain the accounts receivable
        • Credit Default Swaps
          • Offer face value in exchange for underlying securities/cash equivalent
    • VENDORS AS LENDERS OF LAST RESORT
        • Alternative Payment Methods:
        • When Enhancement or Enhancement Tools Are Not Workable
    • VENDORS AS LENDERS OF LAST RESORT
          • Credit Card
            • Appealing to the seller
            • Allows for payment prior to goods being released
            • Risk of chargeback: Unauthorized purchases are fraud
    • VENDORS AS LENDERS OF LAST RESORT
        • Subordination Agreements
        • Terminating Credit
          • Pre-Default
          • Post-Default
    • VENDORS AS LENDERS OF LAST RESORT
        • Repayment Agreements
          • Payment over time
          • Fix the indebtedness
          • Waiver of counter claims and disputes
          • Ordinary course preference defense
          • Most-favored creditor treatment clause
          • Stipulated judgment – Discount coupled with judgment if default
          • Confession of judgment
    • VENDORS AS LENDERS OF LAST RESORT
        • Trade Credit in an Out-of-Court Workout
          • Acting individually
          • Acting collectively with others
        • Monitoring credit lines for big orders ahead of bankruptcy filing
    • VENDORS AS LENDERS OF LAST RESORT
      • Into Bankruptcy
        • Postpetition credit sales
          • Opportunities
          • Liquidation risks
          • Exiting a postpetition credit facility through a sale fo assets
    • VENDORS AS LENDERS OF LAST RESORT
        • Debtor in possession financing
          • How it works
            • Does not guarantee payment of postpetition credit sales
          • Priority Scheme
            • Receive payment before general unsecured creditors
          • Availability in today’s market
    • VENDORS AS LENDERS OF LAST RESORT
        • 20-day claims and postpetition credit
        • Trade lien programs
          • Encourages vendors to sell on credit
          • Junior to a DIP lender
    • VENDORS AS LENDERS OF LAST RESORT
        • Critical vendor doctrine
        • Trade creditors and discrimination with the plan of reorganization