september 2011 bcj
DESCRIPTION
NACM Oregon's monthly newsletterTRANSCRIPT
NACM Oregon Business Credit JournalSeptember 2011
7931 NE Halsey, Suite 200, Portland, Oregon 97213 Tel 503.257.0802 or 800.622.6985 • Fax 503.257.0247
www.nacmoregon.org ...continue on page 12
The Special Mediator ......... 1
Chair’s Message ................ 2
President’s Message .......... 2
Collection Corner............... 3
New Member Introductory . 4
International Corner .......... 5
Member Profile ................. 6
NOF Scholarship Funds and Recipients ......................... 9
Education Schedule ........... 10
BCLC Webinars ................. 10
Credit Techniques .............. 11
Contacts ........................... 14
The “Special” Mediator: An Innovative Approach to an Old Problemby Robert M. Fishman and Gordon E. Gouveia, Shaw Gussis Fishman Glantz Wolfson & Towbin LLC; Chicago
Occasionally, the principal constituents in a Chapter 11 case are involved in litigation that jeopardizes a successful reorganization and has no reason-
able likelihood of a consensual resolution. Such cases usually involve parties that inherently distrust each other, counsel that is willing to litigate every issue and a court that prefers a negotiated resolution over deciding who wins and who loses an “all-or-nothing” dispute—the proverbial logjam. The creditor side of the logjam frequently believes that management is incompetent or motivated by ulterior motives, which is facially supported by management’s role in the events that led to the bankruptcy filings. The debtor-in-possession often contributes to the logjam by exerting whatever leverage it has against the creditors in furtherance of the debtor’s concept of a successful reorganization. The court might be balancing concerns about the creditor’s allegations of mismanagement and malfeasance with the critical role of management in accomplishing an effective reorganization. In many logjam cases, a creditor will file a motion for the appointment of an examiner or a Chapter 11 trustee. The appointment of an examiner will suffice if the goal is merely to investigate the debtor’s financial affairs. On the other hand, the appointment of a Chapter 11 trustee who replaces management and operates the debtor’s business is an extreme remedy with potential wide-ranging and sometimes unintended consequences. The appointment of a Chapter 11 trustee may negatively impact business operations due to delicate business relationships, complex business issues and basic public perception. Furthermore, the parties have no control over the selection of the Chapter 11 trustee, who is appointed by the Office of the U.S. Trustee. While the U.S. Trustee is supposed to consult with the parties regarding the appointment of a Chapter 11 trustee, the degree to which such consultation occurs and is effective (from the parties’ standpoint) varies greatly. When the parties believe that only certain people will be capable of providing the benefit sought, the risk of who the U.S. Trustee might appoint is often too great for one or more of the parties to accept. Alternatively, many logjam cases end up in traditional mediation. One of the advantages of mediation is that the parties get to select a mutually agreeable third party to assist in the settlement process. However, traditional mediation is limited by its very nature because the only thing a mediator can do is attempt to persuade one or both of the parties to accept a certain result or compromise to some middle-ground position. Thus, even when the parties agree that an outside third party might be extremely helpful in breaking the logjam, obtaining the right person for the job and empowering that person to play a meaningful role is itself a difficult task.
Page 1
NACM Oregon Business Credit JournalSeptember 2011
Message from the Chairman I hope that everyone has been enjoying our warm summer days. It’s that time where the gardens are bringing on their harvest, the kids are getting ready or already back to school and NACM is starting it’s Fall with the annual offered conferences:
• The Pacific Northwest Credit Conference September 22-24, Tukwila, Washington • The Western Region Credit Conference October 5-7, Las Vegas, Nevada • The NACM-Canada 13th Annual Credit Conference & Expo October 20-21, Toronto, Canada • The ICTF’s Annual Global Trade Symposium November 6-8, Miami, Florida • FCIB’s 22nd Annual Global Conference November 13-15, Palm Beach, Florida
All of these conferences are on the NACM National and NACM Oregon website. I hope that you will take a look at what the conferences are providing for speakers and education. It’s also that time of year in which we all take a hard look at our accounts past due and may need some help for that end-of-year clean-up. If you have not utilized the NACM Oregon collections group then I encourage you to give them a try. Our collection services provide our membership free “Pre-collect Letter Service” and free “10-day Demand Letter.” NACM Oregon’s experienced staff provides professional collection services and, if necessary, litigation services. The staff also provides online status reports to help you check updates of activity on your specific ac-counts. Don’t wait until it is too late! Let NACM-Oregon collection services clean up your portfolio and your aged accounts. Go to http://www.nacmoregon.org/services/ collection_services.html and find out more about our services.
Raeann Binau, CICP Airgas - Norpac Inc [email protected]
Message from the President We frequently get calls from consumers asking about their credit report. NACM Oregon does not represent the Big 3 consumer bureaus (Experian, Equifax, TransUnion) and refers callers directly to these bureaus. I’m surprised to hear how many people subscribe to FreeCreditReports.com or some other agency that provides one or more bureaus consumer credit report for free just to get the debtor to subscribe for a fee to monthly monitoring or some other service. I trust all readers know they can get their free credit reports from all three bureaus at www.annualcreditreport.com. We have been monitoring the various business credit reports in the market. Several seem to be relatively expensive and have old, tired trade clearances on them. The NACM National Trade Credit Report database has grown by leaps and bounds. More than 20 NACM Affiliates across the country are contributing. In the West, Portland, Spokane, Los Angeles, Las Vegas, San Diego, and Denver contribute, and NACM Seattle will come aboard this month. Please contact your Account Executive or Customer Service to learn more about this. We are pleased to offer a complimentary member seminar on Wednesday, October 12. Nancy Young, our speaker, is a recognized authority on Fraud and will be reviewing various methods in use these days. She will discuss indicators and actions you can take when you suspect or are aware of fraud, either internally or with a customer or prospect. I hope you will plan to join us for the membership breakfast on October 26. John Mitchell will give his annual economic report on where we’ve been, where we are, and where we may be going. Look for more information in this issue.
Rod Wheeland, CCE, CAE Direct: 971.230.1158 [email protected]
Page 2
NACM Oregon Business Credit JournalSeptember 2011
Do You Really Know Your Collection Agency? by Brenda Terreault, DBA, JD
In 2007 and 2008, NACM Oregon received several collection claims against other collection agencies. One of these collection agencies continued to be in the news, Bush & Kennedy Inc., a Baton Rouge, Louisiana-based collection agency.
In 2008, Bush & Kennedy had attracted the attention of the Louisiana Attorney General, which investigated Bush and Kennedy’s activities. In December 2009, a Louisiana District Judge ordered Bush & Kennedy to stop doing business after the Attorney General’s office charged the firm with using deceptive business practices. A month later, the court ordered William Ferguson, the former owner of Bush & Kennedy, and his son to stop using unfair and deceptive practices.
But the Fergusons weren’t barred from working for other debt collection agencies. The attorney general’s office alleges that the Fergusons started up new collection operations, Franklin, Grant & Associates, Inc., and Vincent Sharp & Associates, Inc., became employees of those agencies, and continued the same collection and business practices.
New injunctions issued in July 2011 banned father and son from operating any debt collection agencies. The order this time explicitly stated that neither of the Fergusons can work in debt collection at all in any way.
In July 2011, William Ferguson was charged with 61 counts of bank fraud and three counts of aggravated identity theft. Ferguson, his son, Jason Ferguson, and Quay Parrott, were accused of operating debt collection company Bush & Kennedy Inc., and collecting hundreds of thousands of dollars, but not remitting to the businesses for which they collected the debts. The indictment alleges that Ferguson opened an account at a Louisiana bank in the name of his collection company then allegedly wrote checks in the names of other people and companies portrayed as customers, finally depositing these checks into his company’s bank account. Trial date is set for September 6, 2011.
Collection Corner
Brenda Terreault, JD, CBA, is the Collection Services Manager for NACM Oregon and an Oregon attorney. She has more than 18 years’ experience as an attorney, investigator, and operations manager in governmental, corporate, and law firm settings. Brenda is a regular instructor for NACM Oregon classes/seminars and webinars. Brenda earned her CBA designation in March 2010. You can contact her at 971.230.1196 or [email protected].
Page 3
NACM Oregon Business Credit JournalSeptember 2011
Northwood Cabinets, Inc.
Roy Koistinen
360.225.1001 1570 Guild Rd. Woodland, WA 98674
Founded in 1978, by Dave Kysar as Dave’s Customer Cabinets, Northwood Cabinets provides custom cabinetry for kitchens, bathrooms, laundry rooms, and more. Today, Northwood is a leader in the residential cabinet industry throughout the Pacific Northwest. Northwood employs more than 100 people and has two plant locations.
New Member IntroductionNACM Oregon extends a warm welcome to the following new members:
Experian Business Benchmark Report Experian’s Business Benchmark Report is a quarterly view of how U.S. businesses are faring. Designed to monitor the progess of business recovery, the report shows four key indicators of business health, including commercial risk score, days beyond payment terms, percentage of dollars delinquent, and percentage of dollars severely delinquent.
Findings from the Q2 report showed that the amount of delinquent debt has increased significantly for the largest and smallest businesses. Very large businesses (those with more than 1,000 employees) had the greatest shift in percentage of dollars delinquent, going from 11.6 percent in June 2010 to 18.2 percent in June 2011, and very small businesses (those with one to four employees) had the greatest shift in percentage of dollars considered severely delinquent, going from 9.9 percent in June 2010 to 11.7 percent in June 2011.
To download the report, click here.
Rose’s Equipment & Supply
Karen Rose
503.233.7450 207 SE Clay Portland, OR 97204
Founded in 1979, as a door-to-door operation supplying reconditioned equipment to Portland restaurants, Rose’s has grown into a regional company. Rose’s is one of the largest dealers of new and refurbished food service equipment in the Pacific Northwest.
Speaker TestimonialThanks for the opportunity to speak to your extraordinary members. I regularly speak around the country but have not seen such a commitment to education as your NACM Oregon members.
Scott E. Blakeley, Esq. Blakeley & Blakeley LLP
Page 4
NACM Oregon Business Credit JournalSeptember 2011
International Cornerby Alice Knight
Thursday, August 25, was NACM Oregon International Day held at the Doubletree Hotel in Portland.
The morning speaker was Hubert Sibre, a partner in the Montreal office of Davis, LLP. Hubert focused on a broad overview of “Doing Business in Canada” from the initial credit application to the various insolvency laws.
Although business in Canada and the United States is similar in many ways there are very important differences that creditors need to recognize. One important difference is that there is no countrywide or federal bankruptcy law in Canada. There are differences by Province and Quebec is a world of its own.
Hubert stressed the importance of a well-constructed credit application which should contain information gathering, terms & conditions, security interest provisions, resolution provisions, acknowledgement and venue.
Under upcoming subjects he predicted that environmental claims and payments to pension plans would be major components in 2/3 of all restructuring agreements in the next 20 years. Hubert also included a handout for “Nonfinancial Warning Signs of Insolvency.”
After lunch David Conaway, Managing Partner of the Charlotte, North Carolina, office of Shumaker, Loop & Kendrick, LLP spoke on “Cross-border Insolvency, Chapter 15, and Comparative Analysis of BRIC Countries Insolvency Laws.”
Chapter 15, a new code created as
part of the 2005 Bankruptcy Code Amendments, is a procedural code to supplement a filing in a foreign coun-try when the filing company also has assets in the U.S. The company would file their main bankruptcy filing in their country and Chapter 15 in the U.S. to govern how the U.S. assets would be handled.
Since this a quite new there is little case law and there have been very different rulings in different districts. In one ruling, a Mississippi Bankruptcy Court allowed an administrator from Nevis to bring action available under Nevis Bankruptcy Law to the administration of U.S. assets.
David provided a summary comparison of Insolvency Laws in Brazil, Russia, India, and China. Practicing attorneys in the four countries were asked the same questions for the summary.
A panel, moderated by Alice Knight, touched on areas of major concern for exporters.
Jerry Nierengarten, recently retired after 40 years in banking, with most of that time in foreign currency, traced the political and economic differences reflected in the Canadian dollar/U.S. dollar exchange rates over the last 30 years.
Tony Oriti, Sr. V.P. and Managing Director of the newly created international division of Umpqua Bank spoke on “Opportunities in a Global Market.” Tony discussed political and commercial risk and strategies to mitigate both types of risk.
Brian Welsh, President, Geo. Bush & Co. gave an over view of export and import drivers, the regulatory and legislative environment, the status of ocean carriers and potential new costs of doing business fees on the near
horizon.
Michael Meyers, Economist and Alexa Hamilton, Global Trade Specialist, Business Oregon, rounded out the afternoon with a presentation on Oregon Export Trends and Export Assistance for businesses.
This was a great opportunity to learn new areas, keep up with new trends and network with others in our area.
Join NACM’s International Group for lunch the third Friday of each month for continued networking and education.
Alice Knight is Vice President of Finance & Administration for Paper Products Marketing, Inc. Ms. Knight has more than 45 years' of experience in International Finance and is an active member of ICTF and NACM. She has served as Co-chair, Panel Member and Presenter at Annual Global Conferences, as President of FCIB Forest Products Group, and participated in FCIB Conferences in Mexico, Puerto Rico, Munich, and Brussels.
Page 5
NACM Oregon Business Credit JournalSeptember 2011
Member ProfileDenise Dowless President Col Tab Inc.
For almost 30 years Col-Tab has been providing collation and binding services from a nondescript single story brick building on Southeast Belmont. Founded in 1984 by John J. Landstrom, the company grew to include desktop and print-on-demand services, offering customers a comprehensive source for specialty printing. By the time he started his fifth business in 1984, John Landstrom already had a reputation as a successful entrepreneur. Denise Dowless, Landstrom’s daughter and currently a co-owner at Col-Tab, remembers her dad’s string of successful business endeavors. She remembers that he would typically sell a business after ten years of successful operation yet over the years Col-Tab was the only one he wouldn’t sell. Showing some of her father’s enthusiasm, Dowless didn’t wait until high school graduation to find work. When she wasn’t practicing for sports she would work after school at a mailing company. She moved on to work at a residential appraisal company and eventually landed at Col-Tab, where she did the accounting—by hand. Working under her father, Dowless was able to experience the way Col-Tab operated at the ground level and in fine detail. While working as the
continued on page 7
company accountant, Dowless took advantage of their NACM membership and took several classes to round out her professional education. In 2000, Col-Tab’s founder was ready to retire. Dowless and her brothers bought the one company their father had held onto. Col-Tab has remained in the family since. Landstrom was diagnosed with lung cancer and passed away shortly after retiring. “It was a big wake up call,” says Dowless. As a business leader Landstrom had left big shoes to fill. Fortunately Dowless doesn’t have to fill them herself. The daily business operations at Col-Tab rest on Dowless and her brother John E. Landstrom’s capable shoulders. “We work well together,” says Dowless. “He keeps the factory going, I keep the day-to-day administration going.” It has been ten years since the siblings purchased Col-Tab and Dowless and Landstrom have kept the business going through one of the worst recessions in generations. They wear the label of “working owners” with pride. Though her focus is on business administration, Dowless pays close attention to what is going on on the factory floor. Tracking staffing and keeping an eye
Page 6
NACM Oregon Business Credit JournalSeptember 2011
Member Profile, continued from page 6
on machinery might seem like just one more piece of minutia, but it is their dependability that ensures Col-Tab’s reliability. “Because businesses,” as Dowless says, “ rely on us.” Customers relying on Col-Tab come from a wide variety of industries. Some of their customers are self-published authors like Virginia Krull, who wrote and hand-painted a children’s book. Most of their customers, however, are looking for more industrial printing services, like legal exhibit tabs for law firms or proposals for engineering and architectural firms. Because the success of their business depends on the quality of their equipment and staff, Dowless and Landstrom try to ensure their employees have a steady income—not easy in a their industry—and still try and remain competitive. Col-Tab’s high level of staff retention is a source of pride. Says Dowless, “We have four employees who have been here since 1986. It’s like family.” The level of quality on the factory floor may not make them the cheapest collation and bindery option in town, but Dowless prefers to focus on their comprehensive, high quality level of service. Says Dowless, “I feel like we are the Nordstroms of our industry. We’re not the cheapest, but our customers get what they pay for.” That high standard sometimes gets in the way when bidding on a job. But, continues Dowless, “We’re not in the business to buy our work.” As Dowless points out, “The competition out there is brutal.” Which is why word of mouth is so crucial, especially when underbidding competitors isn’t always an option. “It’s exciting to have a customer come back to us, happy with our services,” says Dowless. But even better? “Hearing customers and vendors refer us to other companies.” From the second generation owners to the long-tenured staff, since 1984 Col-Tab has been a family affair, and this family has found a simple recipe for success that could last for generations to come.
Page 7
Congratulations go out to Jacki Bloom, Wright Business Graphics, on her recent CBA
designation. Way to go Jacki!
NACM Oregon Business Credit JournalSeptember 2011
Check It Out!The NACM Trade Credit Report
Don’t forget to take the opportunity to check out the NACM Trade Credit Report from the NACM National Database. These business credit reports are compiled from payment data from accounts receivable records. They provide a credit score, present trade status, historical trending, past-due charting, flash information, and past inquires. This database, composed of contribution from 25 NACM Affiliates across the country, holds a substantial amount of credit experience, which is available to members through the NACM Trade Credit Report. Every member receives 25 free reports as part of their membership package, so we encourage you to take advantage of this great opportunity. These reports are available to members at $14. We also offer an Unlimited Usage Contract for $1,975. Contact Barbara Salazar at 971.230.1182 or [email protected] to obtain a User ID and Password. If you have an existing User ID and Password for the industry group or collection site, you may use the same login. Go to www.nacmoregon.org and click on Credit Reporting Services. For more information on NACM Trade Credit Reports call Adam Tenuta at 971.230.1184.
© New Yorker Cartoon 2003 Mike Twohy from cartoonbank.com. All Rights Reserved.
Employee Placement ServiceThis networking tool is offered free of charge to NACM Oregon members. You may include your resume in our resource pool, or utilize it to fill an opening in your credit, accounting, or collection department. To participate in this program, please call Barbara Salazar at 971.230.1182 or 866.359.1182.
The following person is a candidate for possible openings in the credit community in the Northeast area. If the following “ad” is of interest to you, or if you’d like more information about the individual applicant, please call Barbara Salazar at 971.230.1182.
Seeking Position:
I am a self-motivated, forward thinking person who enjoys challenges. Seeking long-term employment where my abilities are utilized to achieve internal objectives. My background includes: all phases of credit/collection functions, corresponding with sales departments and customers, and financial statement analysis.
Page 8
NOF Scholarships
Take your education to the next level
Established in 1997, the NACM-Oregon Foundaton is one of the largest sources of financial assistance in the U.S. for credit professionals. The Foundation gives financial assistance for NACM offerings, select Portland Community College (PCC) courses, schools, and conferences. In 2010, the Foundation distributed more than $4,424 in scholarships to NACM Oregon members. The Foundation is committed to the advancement and education of credit professionals. The NACM-Oregon
The NACM-Oregon Foundation grants scholarships to credit professionals for continuing education, professional designations, and conference expenses.
To apply for scholarship funds, or for more information, contact Lourdes (Lou) Rice, NOF Scholarship Committee Board Director, Pacific Metal Company at 503.454.1051 or [email protected].
Submit applications to:
Lourdes (Lou) A. Rice NOF Scholarship Committee Board Director Pacific Metal Co. 10700 SW Manhasset Dr. Tualatin, Oregon 97062p: 503.454.1051 f: 503.454.1065 e: [email protected]
Foundation manages two scholarship funds: the NACM-Oregon Scholarship Fund and the Phylliss Clark Memorial Fund. The foundation offers scholarship to the following events:
• All NACM Oregon educational courses • Portland Community College courses within the Credit Administration and Advanced Credit Administration Programs in preparation for professional designation • Self-study courses in preparation for professional designation • Registration and exams fees for the National NACM Professional Designation Program • NACM/CFDD Pacific Northwest Credit Conference • National Credit Congress and Exposition • NACM National schools such as Credit Management Leadership Institute, Mid-Career School, and the Graduate School of Credit and Financial Management
If taking a course or pursuing your certification seems like an expensive proposition, think again. These scholarship funds are a benefit to you as a member, so please take advantage by applying for next year.
Directors of the Board are Jeffrey O’Banion, CCE, CICP (Northwest Natural Gas); Betty Beeson-Bauder, CBF (Pendleton Woolen Mills); Alice Campbell, CBF, CICP; Barbara Davis, CCE (Northwest Pump & Equipment); Charlene Gothard (Land O’ Lakes Purina Feed LLC); Tom Hammond (Retired); Lori Kimball, CBF (Norpac Foods Inc.); and Lou Rice (Pacific Metal Company). The Board is chaired by Dave Erickson, CCE (Allports Forwarding Inc.).
Congratulations to the following recipients of the NACM-Oregon Foundation scholarship to the Pacific
Northwest Credit Conference: Charlene Gothard, Land O’ Lakes Purina Feed LLC Damon Miklowic, Peterson Pacific Corp.
NOF also awarded the membership fee to Sandee Texley, CCE, retired, from Eugene, Oregon, to the CFDD Portland Chapter.
Page 9
NACM Oregon Business Credit JournalSeptember 2011
2011 Education Class Schedule
RegistrationTo register for on-site classes, please visit www.nacmoregon.org/events. Go to the current course schedule, then click on “view details” to register. If you have any questions regarding these classes, please call Elizabeth Heintz at 971.230.1120 or email [email protected].
Certification Roadmap IntroductionSeptember 8, 2011, 11:30 a.m. - 1 p.m.NACM Oregon ClassroomFREE! Lunch includedSpeaker: Marilyn Rea, CCE, Pacific Architectural Wood Products
Building Blocks to Successful Credit ManagementSeptember 15, 8:30 a.m. - 4 p.m.NACM Oregon ClassroomCEU: .65, Course Level: C$195/member, $275/nonmemberSpeakers: Rod Wheeland, CCE, CAE, NACM Oregon and Brenda Terreault, JD, CBA, NACM Oregon
Preventing and Detecting Fraud October 12 2011, 3:30 - 5 p.m.CEU: .15 Embassy Suites at the Portland AirportComplimentary to NACM Oregon members; $95 - nonmembers Speaker: Nancy Young, CPA, CISA, CFE, MBA, Moss-Adams, LLP
NACM Oregon Member BreakfastOctober 26 2011, 7:30 - 9 a.m.CEU: .15, Course Level: I Location TBD$35/member, $65/nonmemberEducational Session: Economic UpdateSpecial Guest Speaker: John Mitchell, Economist
Other Activities
Pacific Northwest Credit ConferenceSeptember 22-24, 2011 Tukwila, WA www.pnwcc2011.com
Western Region Credit ConferenceOctober 5-7, 2011Las Vegas, NV
NACM Oregon Open HouseDecember 14, 2011, 4 - 7 p.m.NACM Oregon Classroom
Course LevelsC (core) – Classes that focus on credit concepts, techniques, and practical tips. They are designed for the newer credit department employee and the more experienced credit professional looking for a review.I (intermediate) – Classes assume basic knowledge of credit concepts and address specific issues and approaches to resolution.A (advanced) – Classes that assume significant knowledge and experience and address complete topics of interest to credit and financial professionals.
2011 Business Credit Learning Center
Establishing a Credit Policy September 9, 2011, 9 - 10 a.m. PT
You Can’t Manage What You Can’t Measure September 13, 2011, 9 - 10 a.m. PT
Negotiation Skills for the Credit Manager September 20, 2011, 9 - 10 a.m. PT
Understanding Financial Statements September 21, 2011, 9 - 10 a.m. PT
Letters of Credit Basics September 27, 2011, 9 - 10 a.m. PT
Escheatment Update September 29, 2011, 9 - 10 a.m. PT
Setting Credit Limits September 30, 2011, 9 - 10 a.m. PT
Webinar fee: $79 each - member; $109 each - nonmember
For a complete list of webinars and descriptions, please visit www.businesscreditlearningcenter.com.
If you have any questions on any of the webinars, call Elizabeth Heintz at 971.230.1120, or [email protected].
Schedules are subject to change.
Page 10
NACM Oregon Business Credit JournalSeptember 2011
Credit TechniqueAlways by Michael C. Dennis
Here are some “always” tips for collectors:
• Always ask about the status of payment of the entire past-due balance including invoices and customer deductions.
• Always ask when the customer’s payment was mailed— not when their payment is scheduled to be mailed.
• Always make a second effort at resolving a past due during a collection call, even when your first attempt was rebuffed. You have very little to lose and much to gain by making one last attempt at getting a reasonable commitment from the debtor. Even if this approach works only 5 percent of the time, it is still worth trying.
• Always remember that debt collection is competitive. Your company is in competition with every other vendor for payment from customer because customers often have insufficient cash and must therefore allocate cash between and among their creditors.
• Always include a copy of the Proof of Delivery if possible when a customer requests an invoice copy. Doing so eliminates a second reason or excuse for delaying payment.
• Always ask for a detailed explanation when a customer says they cannot or will not accept copies of supporting documentation and demands that you mail originals. This is often a convenient excuse to delay payment.
• Always ask for more than you expect to receive from the debtor’s A/P department. If you get everything you asked for, even better.
• Always ask to be transferred to speak to the final the decision maker if the person you are speaking to cannot negotiate a reasonable payment schedule.
• Always ask your cash application person or department to call customers that have not provided supporting documentation to request that they send the needed information and documentation immediately.
• Always assign a credit limit to customers with COD terms. COD is actually open account terms until the customer’s check clears.
• Always document broken payment commitments for future reference.
• Always be prepared to compromise by accepting less than payment in full once you are convinced that you have received the debtor’s best offer.
• Always try to be upbeat during collection calls.
• Always be willing to accept help from any source in your collection efforts including but not limited to assistance offered willingly or reluctantly by your own sales department.
• Always become progressively more assertive the further past due an account becomes.
• Always paraphrase, clarify and summarize what was said or agreed to prior to ending a collection call.
• Always try to avoid confrontations. Confrontations with customers usually do not result in payments being received sooner.
• Always call delinquent customers as often as necessary to get a commitment for payment—provided that you do not call so frequently that your actions would be considered harassment.
• Always confirm all payment agreements more than 10 days in the future in writing. With commitments more than ten days out, it is possible the debtor will forget to pay as agreed if they do not receive a written reminder.
Watch for the “Never, Never” issue next month.
Michael Dennis is a business credit consultant, speaker and webinar presenter. He is also the author of “1001 Collection Tools and Tips.” His website is at www.coveringcredit.com.
© 2011. Michael C. Dennis. All Rights Reserved. Mr. Dennis can be reached by email at: [email protected].
Page 11
NACM Oregon Business Credit JournalSeptember 2011
The “Special” Mediator, continued from cover
...continue on page 13
Somewhere in between the Chapter 11 trustee and the traditional mediator lies a creative solution called the “spe-cial mediator,” who is selected by the parties and granted certain powers by the court to exert greater influence in the settlement process. Sometimes, the “road less traveled” can produce unexpected beneficial results. Such is the tale of the Chapter 11 cases of Lauth Investment Properties LLC, et al., case no. 09 06065 BHL 11, pending in the U.S. Bankruptcy Court for the Southern District of Indiana, Indianapolis Division (the “Lauth cases”) before Hon. Basil H. Lorch III. In the Lauth cases, the parties and bankruptcy court were embroiled in a complex, substantial, and apparently never-ending series of litigation over every substantive issue in the cases. While the court was more than willing to resolve each and every one of the disputes, litigation outcomes usually present “winner-take-all” outcomes and often unintended peripheral consequences. In the Lauth cases, the parties and court turned to a somewhat unorthodox approach to attempt to find a solution to the numerous disputes. The business transaction underlying the Lauth cases began with a significant investment transaction from the summer of 2007 wherein Inland American Real Estate Trust Inc., made substantial equity investment with the Lauth entities, subject to certain restrictions and conditions. With the onset of the real estate crisis in 2007, the business relationship between Inland and Lauth became strained, and soon the parties’ relationship suffered irreparable damage. Multiple disputes arose, and the Inland prepared to exercise its remedial rights under the agreements between the parties. In anticipation of such remedial action, the Lauth entities filed the Lauth cases and the struggle moved to the bankruptcy court. From May 2009 until April 2010, numerous disputes between Inland and Lauth arose in and were prosecuted before the bankruptcy court. Lauth filed a motion and an adversary proceeding against Inland to enforce the automatic stay. Inland objected to Lauth’s motions to use cash collateral, obtain financing, and operate its business in Chapter 11. Inland filed motions to dismiss the Chapter 11 cases and lift the automatic stay, and objected to Lauth’s professional fees. Lauth filed another adversary proceeding against Inland for declaratory judgment on certain indemnification issues to effectively subordinate Inland’s
claim. Millions of dollars of professional fees were incurred by both parties. The distrust and bad feelings between them gave rise to an environment in which every significant strategic move proposed by Lauth was opposed by Inland. That situation seemed to exist without regard to the pros and cons of either Lauth’s proposed action or Inland’s reaction thereto. In addition, during the course of the cases, Inland initiated its own motions seeking various forms of relief, all of which were opposed by Lauth. The tensions between the parties, and the potentially adverse consequences to the cases generally, came to a head when Inland filed its motion for the appointment of a Chapter 11 trustee (the “trustee motion”). Lauth filed a response vigorously opposing the trustee motion (the “response”), and the matter was set for a trial to begin in early April 2010. As is so often the case, while on the courthouse steps, alternative possibilities were tossed out for consideration and contemplated by the parties. With the firm assistance of the bankruptcy court, the parties reached a consensual resolution of the trustee motion that was unique. The parties negotiated an agreed order, which, among other things, provided for the appointment of a “special media-tor.” The special mediator was granted an unusual set of “rights, powers, and duties” as follows (the “powers”):
1. The special mediator was authorized to retain counsel to be compensated from the estate;
2. The special mediator was authorized to “negotiate” with the debtors, Inland and all other parties in interest regarding any Chapter 11 plan; 3. The special mediator was authorized to “comment upon or report to the Bankruptcy Court” regarding any Chapter 11 plan; 4. The special mediator was granted full and complete access to the books, records, employees, and financial advisors of the debtors, and was authorized to communicate directly with the debtors’ agents; 5. The special mediator was deemed a party in interest under § 1109 of the Bankruptcy Code and was authorized to appear and be heard on any matter; and 6. Upon leave of the bankruptcy court, the special mediator was authorized to file his or her own plan.
Page 12
NACM Oregon Business Credit JournalSeptember 2011
The Special Mediator, continued from page 12 viewed as key by the parties. These negotiations, and not merely a mediator attempting to cajole two parties to reach an agreement. The powers of the special mediator played a significant and valuable role in achieving the consensual resolution. The agreed order was entered in April 2010, the spe-cial mediator obtained and reviewed information in May 2010, and the parties began negotiating in earnest in June 2010. By the end of July 2010, a deal in principle had been struck, and in august 2010, a settlement motion was filed with the bankruptcy court and served on the creditors. The settlement hearing was held in September 2010, at which time the settlement was approved. The settlement transac-tions were closed in October 2010. In the Lauth cases, the use of a special mediator with enhanced powers proved to be very successful. Its suc-cess hinged, in the first instance, on the bankruptcy court’s willingness to turn to an unconventional approach to break the logjam. It further required the parties to agree to the creation of a unique third party with real power and the ability to take action in the Lauth cases that might not have been what either party wanted to see happen. The risks were real but the ultimate reward was great: On may 25, 2011, the bankruptcy court entered an order confirming Lauth’s reorganization plan.
1 Co-author Bob Fishman was selected to serve as the special mediator in this case.
The parties did not agree on the selection of the special mediator until after entry of the agreed order. Ultimately, the parties made their selection and the bankruptcy court approved that selection.1
Establishing the parameters for this special mediation was the first complexity because the task was not merely that of traditional mediation. The job was to mediate the cases to a successful conclusion, not merely to resolve a distinct legal dispute. While there were multiple identifi-able legal disputes, not one of them was outcome-deter-minative. In the Lauth cases, it appeared that complete disengagement between the Lauth entities and the Inland entities was the only course of action likely to be achiev-able. From the first day, the special mediator made it clear that in the event that the parties were unable to reach a consensual resolution, the only approach was a sale of all of the properties, to be followed by extensive litigation about who was entitled to the proceeds. It was everyone’s belief that such an approach was not likely to result in the maximum benefit from Lauth’s real estate holdings. The parties, with the strong urging of the special media-tor, ultimately embarked on a property-by-property analy-sis, with an eye toward dividing the properties on some consensual basis. The focus became one of valuing each of the properties and determining what would constitute an equitable division. Once the approach was determined, and not without substantial disagreement on both the valuations and the equitable division, the parties eventually reached an agreement by dividing the properties, utilizing some cash to “even” things out and, to the great credit of both the Lauth and Inland business people and counsel, leaving all of the emotional baggage of “who did what to whom” behind. There can be no doubt that the powers granted to the special mediator played a very meaningful role in the success of this approach. Because the special mediator was not limited to persuading the parties to modify their respective positions, the mediator had a great deal of leverage. The special mediator’s designation as a § 1109 party in interest with the right to be heard on all issues was very important. The special mediator’s ability to seek leave of bankruptcy court to file a plan, as well as the right to comment on any plan offered by any party, was also
Reprinted from the July/August 2011 ABI Journal, Vol. XXX, No. 6 at 16, 53,
with permission from the American Bankruptcy Institute (www.abiworld.org).
Bob Fishman (l) is co-chair of the Shaw Gussis Fishman Glantz Wolfson & Towbin Bankruptcy and Insolventy Group in Chicago, a former ABI president, and a Fellow in the American College of Bankruptcy.
Gordon Gouveia (r) is an associate in the
firms Bankruptcy and Insolvency Group. He currently serves as co-chair of the Future Leaders Committee of the Turnaround Management Association.
Page 13
NACM Oregon Business Credit JournalSeptember 2011
Board of Directors NACM Oregon
Page 14
ChairmanRaeann Binau, CICP Airgas - Norpac, Inc. [email protected]
Vice ChairKimi Shelton-Muller, CCE EKC Consulting, [email protected]
SecretaryJohn Hardy Emerson Hardwood [email protected]
TreasurerMarsha Johnson, CCE TEC Equipment, [email protected]
CounselorSue Hein Rapid Bind, [email protected]
Customer Service/ Credit Reporting971.230.1220 [email protected]
Data ContributionShannon Abnal 971.230.1166 [email protected]
Member Services Kathy Linscott 971.230.1164 klinscott@nacmoregon
Member Services Account Executives Kristin Curtis 971.230.1172 [email protected]
Denise [email protected]
Collection SalesClara [email protected]
EducationElizabeth [email protected]
Directors Steve Amiel Electrical Distributing Inc./[email protected]
Linda Bishop, CCE, CICP Tektronix, [email protected]
Will Campbell Standard Supply [email protected]
Tony Ceniga Industrial Finishes & [email protected]
Paula Cooley, CBA American Steel [email protected]
Lori Jones, CCE Eoff Electric Supply [email protected]
Pat Swope, CCE, CICP Pacific Seafood Co., [email protected]
PresidentRod Wheeland, CCE, CAE NACM [email protected]
Industry GroupsRichard Browning 971.230.1188 [email protected]
Kristen McBride 971.230.1176 [email protected]
Collection ServicesBrenda [email protected]
BillingMarmie [email protected]
Meeting Room RentalElizabeth [email protected]
Newsletter EditorBarbara Salazar971.230.1182 [email protected]