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LAW OF THE LAND VS LAW OF THE JUNGLE

IT'S NOT A MATTER OF WHOSE RIGHT, IT'S WHOSE LEFT!

JUNGLE STORY # 1:

BROKER SUES SHIPPER FOR FAILURE TO PAY FREIGHT BILLS. SUBSTANTIAL SUM IS OWED.

DEPOSITIONS WERE TAKEN. LENGTHY SETTLEMENT NEGOTIATIONS AND SETTLEMENT COMPLETED. MODEST DOWN PAYMENT AND A PAYMENT PLAN.

ONE PAYMENT IS MADE.

SHIPPER WENT OUT OF BUSINESS. NO ASSETS.

BROKER THOUGHT SHIPPER OWNED CONSIDERABLE AMOUNT OF REAL ESTATE BUT LEARNED TOO LATE THAT IT WAS LEASED!

PRINCIPALS OF THE BUSINESS DISAPPEARED.

MORAL

FOR SIGNIFICANT SHIPPING CONTRACTS, ACCURATE AND CURRENT CREDIT INFO IS CRITICAL. USE CREDIT APPLICATIONS WHICH INCLUDE PERSONAL GUARANTEES, IF POSSIBLE. CREDIT APPLICATION SHOULD ALLOW/AUTHORIZE ACCESS TO ALL BANKING INFORMATION INCLUDING ACCOUNT NUMBERS AND BALANCES. GET FINANCIAL STATEMENTS AND REVIEW THEM CAREFULLY! ESTABLISH CREDIT LIMITS AND STICK TO THEM! FOR EXTENDED ( beyond original limits) CREDIT GET IT SECURED WITH LIQUID ASSETS!

JUNGLE STORY # 2;

BROKER ARRANGES WITH MOTOR CARRIER TO TRANSPORT HIGH PRICED SPECIALLY FABRICATED STEEL. MOTOR CARRIER FAILS TO TARP THE LOAD PROPERLY CAUSING SERIOUS DAMAGE. CARRIER DENIES LIABILITY. SHIPPING CONTRACT CALLS FOR ARBITRATION OF DISPUTES.

ARBITRATION PROCEEDINGS OCCUR.

BROKER WINS DAMAGES, ARBITRATION COSTS AND ATTY FEES WHICH ARE ALLOWED BY CONTRACT.(SO YOU THINK YOU ARE GOING TO BE PAID? THINK AGAIN!)

CARRIER REFUSES TO PAY AND DEMANDS THAT ARBITRATION PROCEEDING BE REOPENED. ARBITRATION ASS'N REFUSES TO REOPEN BECAUSE MATTER WAS OFFICIALLY CLOSED.

CARRIER REFUSES TO PAY ARBITRATION AWARD.

BROKER INCURS MORE LEGAL COSTS TO GET AWARD OF ARBITRATION ENTERED AS JUDGEMENT. (MUST FOLLOW LOCAL STATE STATUTES)

ARBITRATION AWARD IS CONVERTED INTO A JUDGEMENT IN BROKERS HOME STATE.

CARRIER STILL REFUSES TO PAY JUDGEMENT!

BROKER INCURS MORE LEGAL COSTS TO TRANSFER JUDGEMENT FROM ITS HOME STATE TO STATE IN WHICH THE CARRIER HAS ITS PRINCIPAL OFFICES.

BROKER NOW HIRES THRU ITS ATTY ANOTHER( LOCAL) ATTY TO TRY TO COLLECT THE JUDGEMENT.

FINALLY ON THREAT OF FURTHER LEGAL ACTION CARRIER PAYS THE JUDGEMENT!

LEGAL FEES (UNLESS PROVIDED FOR IN CONTRACT) INCURRED IN ENFORCEMENT OF ARBITRATION AWARD ARE NOT RECOVERABLE!

MORAL: IN TODAY'S TOUGH BUSINESS CLIMATE, JUST BECAUSE YOU WIN AN ARBITRATION AWARD DOESN'T MEAN YOU WILL GET PAID.

USE CONTRACTS WITH CLAUSES THAT ALLOW COLLECTION OF ALL LEGAL FEES AND COSTS INCURRED IN ANY COLLECTION ACTIVITY.

BE PREPARED TO FIGHT IT ALL THE WAY.

PERFORM A THOROUGH FACT INVESTIGATION AND ASSEMBLE THE BEST EVIDENCE YOU CAN AS SOON AS POSSIBLE. IT WILL BE ESSENTIAL TO WIN YOUR CASE.

MAKE REGULAR CREDIT CHECKS PERIODICALLY INCLUDING JUDGEMENT SEARCHES. IF YOU ARE GOING TO BE AT THE END OF A LONG LINE OF JUDGEMENT CREDITORS THERE MAY BE NOTHING TO COLLECT!

JUNGLE STORY # 3

BROKER HAS MAJOR SHIPPING CONTRACT W/ NATIONAL COMPANY. SHIPPER HAS SIX FIGURE CREDIT LIMIT. CREDIT LIMIT IS SLOWLY EXCEEDED AND CASH FLOW BECOMES SLOWER. BROKER AND ITS CARRIERS ARE SIGNIFICANT PLAYERS, "ESSENTIAL" IN GETTING SHIPPER S GOODS TO MARKET WHICH ENABLE THE SHIPPER TO CONTINUE IN BUSINESS. SHIPPER FILES FOR BANKRUPTCY PROTECTION UNDER CHPT 11.

WHAT TO DO?

GET DRUNK AND WRITE OFF THE DEBT? NOPE!

MAKE SURE YOU ARE ON, OR REPRESENTED ON THE CREDITORS COMMITTEE. THE DEBTOR HAS 6 MONTHS TO FILE A PLAN OF REORGANIZATION. THIS MAY BE EXTENDED BY ANOTHER 6 MONTHS. IF THE PLAN IS NOT ACCEPTED THE CREDITORS CAN OFFER THEIR OWN PLAN. BE AS ACTIVE AS POSSIBLE IN EITHER PLAN. DEBTS ARE PLACED IN "CLASSES" AND ARE PAID OFF AT DIFFERENT RATES OF SPEED AND DOLLAR AMOUNTS/ PERCENTAGES DEPENDING ON THE CLASS.
YOU MAY BE ABLE TO NEGOTIATE WITH THE TRUSTEE OR ATTY FOR THE DEBTOR AND GET COURT APPROVAL TO "CLASSIFY" YOUR DEBT AS AN "ADMINISTRATIVE EXPENSE" AND GET IT PAID OFF AT 100%! IN EXCHANGE YOU MAY HAVE TO AGREE TO PROVIDE THE SAME TRANSPORTATION SERVICES AS YOU DID BEFORE THE CHPT 11 FILING BUT YOUR LIMIT OF RISK IS 30 DAYS. IF THE DEBTOR DOES NOT STAY CURRENT YOU CAN QUIT PROVIDING THE SERVICES.

MORAL: GET INVOLVED EARLY AND NEGOTIATE AT EVERY POSSIBLE OPPORTUNITY TO GET YOUR DEBT CLASSIFIED TO PROVIDE YOU WITH THE BEST POSSIBLE RESULTS.

JUNGLE STORY # 4

YOU HAVE HEARD PEOPLE SUGGEST USING SMALL CLAIMS COURTS. EACH COUNTY HAS ONE AND EACH ONE MAY HAVE DIFFERENT MAXIMUM DOLLAR AMOUNTS THAT CAN BE ASSERTED. (JURISDICTIONAL AMOUNTS).

USE THE SMALL CLAIMS COURTS. THEY WORK!

WHENEVER YOU GET PAID BY A SHIPPER MAKE A COPY OF THEIR CHECK AND KEEP IT IN THEIR FILE. FOR CARRIERS, ASK FOR THEIR BANK ACCOUNT NUMBERS
WHEN YOU GET A CREDIT APPLICATION.

NOW YOU HAVE TO SUE ONE OF THEM IN YOUR HOME STATE, AND HOME COUNTY SMALL CLAIMS COURT. YOU GET A DEFAULT JUDGEMENT ,(THEY ARE NOT LIKELY TO APPEAR), NOW WHAT?

FILE YOUR JUDGEMENT IN THE HOME STATE OF THE SHIPPER OR CARRIER.

GET LOCAL COUNSEL TO GET A WRIT OF EXECUTION AND THE LOCAL SHERIFF TO ATTACH THE BANK ACCOUNT YOU ALREADY KNOW EXITS! YOU MAY BE PLEASANTLY SURPRISED!

THE KEY TO MAKING THIS WORK IS GETTING BANK ACCOUNT NUMBERS.

JUNGLE STORY # 5

YOU HAVE A LARGE DEFAULT JUDGMENT AGAINST A SHIPPER.( OR CARRIER) IF IT'S LARGE AND DEFAULT, THAT SHOULD BE SIGNAL THAT THEY ARE NOT TOO WORRIED ABOUT PAYING. THEY PROBABLY DON'T HAVE ANY MONEY OR ANY OTHER ASSETS.

YOU FIND OUT THEY HAVE A LARGE BANK ACCOUNT IN ANOTHER STATE. WHAT TO DO?

YES, YOU HAVE TO FILE YOUR JUDGMENT (CERTIFIED COPY) IN THE FOREIGN STATE AND CONVERT IT INTO A JUDGMENT OF THAT STATE. THEN YOU MUST FOLLOW THAT STATES COLLECTION PROCEDURES. YOU WILL NEED TO INVOLVE LOCAL COUNSEL. ALL OF THIS TAKE TIME....WEEKS IF YOU DON'T BIRD DOG THE MATTER AND "RUSH" IT EVERY STEP OF THE WAY.

RESULT....IF YOU ARE QUICK ENOUGH YOU MAY BE ABLE TO ATTACH THE BANK ACCOUNT AND IF YOU ARE NOT, THEN YOU WILL BE VERY SAD.

MORAL: IF YOU WANT A BETTER CHANCE OF COLLECTING YOUR MONEY, MOVE AS FAST AS POSSIBLE. YOU MUST BE AGGRESSIVE.

IT'S NOT A MATTER OF WHOSE RIGHT, IT'S WHOSE LEFT!

Outline from seminar at TIA meeting March, 2003

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