1. Allied Building Products 18500 Von Karman Ave, Fifth Floor
BROADENING THE SCOPE OF LIABILITY WHEN INSOLVENCY STRIKES YOUR CUSTOMER
David Groom
Director of Credit,
Allied Building Products
15 E Union Ave
East Rutherford, NJ 07073
David Mannion, Esq.
54 W. 40th Street
New York, NY 10018
V. (917) | F. (949)
Scott Blakeley, Esq.
18500 Von Karman Ave, Fifth Floor
Irvine, CA 92612
V. (949) | F. (949)

2. COLLECTION STRATEGIES
Claims against Insiders
Piercing the corporate veil
Alter Ego liability
Corporations whose Charters are Revoked
Officers, Directors and Controlling Shareholders
Claims against Third Parties
Concept of Limited Liability. Officers and owners insulated from liability to corporation’s creditors
Exceptions to be discussed:
Sale Exceptions (where 3rd party buys the debtor’s assets)
Mere Continuation
De Facto Merger
Fraudulent Transfer

3. WHAT CONTRACTUAL DOCUMENTS GOVERN THE TRADE RELATIONSHIP
Sales team
Information
Credit team pref
Credit team
Credit Application
Information &
T’s and C’s
Who has the Trade Leverage?
Indispensable customers or key supplier?
Sales team/customer pref
Offer to buy
An acceptance of an offer to sell
Confirmation of a verbal agreement
New Account
Set up
P.O.’s and Invoices
Customer pref
Customer-Supplied Vendor Contract

4. CREDIT ENHANCEMENTS

5. THE CREDIT APPLICATION AND VENDOR CONTRACT
Terms and Conditions
Applicant will not withhold payment when disputes arise. Only the disputed portion of a past-due balance may be withheld
Applicant agrees to pay all collection costs (attorneys’ fees, collection agency and court costs)
Applicant agrees to the specified governing law and forum selection clause
Waiver/duty to inspect within fixed time period
Default interest
Unilateral right to terminate credit sale
Unilateral right to arbitrate

6. CREDIT RISK FLAGS Warning signs of delinquencies
A/R aging
High credit risk score
Timing for what is considered delinquent
Collections
Judgments
Liens
Bankruptcy
Likelihood of small business to become severely delinquent
Monitoring accounts
Tighter lending practices
Vendors as lenders
Monitoring of bank lending, term dates and covenants

7. DEALING WITH PAST DUE INVOICES YET MAINTAINING SALES
Ways to determine type of high risk customer (Is the relationship salvageable?)
Request for financial information and confidentiality agreement
Third party comment
Salesperson and credit pro customer visit
Contact customer’s bank
Talk to industry group members and other suppliers
Landlord
Repayment agreements: fixing indebtedness and waiving claims
Credit enhancements
Dealing with insolvency

8. OUT OF COURT ALTERNATIVES
Bulk Sale
Secured Party Sale
Negotiated Settlement with Individual Creditors
Assignment for Benefit of Creditors
Composition Agreement