International business account recovery

Case all bogey on the debtor’s illusion

Case Case Synopsis

Domestic A company and Taiwan B company have started trading since 1996. The payment method adopted is credit sales. The annual trade volume is about 2 million US dollars. Before 2004, A company received normal foreign exchange on schedule.

Since the second half of 2004, due to the skyrocketing prices of raw materials and insufficient export quotas, Company A has suffered a large loss. After consultation between the two parties, the cost of purchasing the quota by Company B is about US$300,000. This additional expense occupies part of Company B. funds. Therefore, from the second half of 2004 to 2005, Company B accumulated arrears of A company's purchase price of more than 500,000 US dollars. After repeated recovery by Company A, Company B agreed to repay the installment from the beginning of 2005 and issued a written repayment agreement, but the agreement was not implemented. During this period, Company A had urged Company B to repay several times through telephone, fax and other means, until it lost contact with the debtor.

In June 2005, Company A officially entrusted us to recover the arrears from Company B. The investigation found that: (1) Debtor B Company is a family-owned enterprise. Because of its physical health problems in the past two years, the main responsible person has undergone many operations and long-term hospitalization, resulting in the internal management of the company being out of control and currently insolvent; (2) Company B has already filed for bankruptcy, but has not completed the relevant bankruptcy procedures according to law. In fact, it has no repayment ability.

Based on the current situation of the debtor and the advice of our lawyers, we believe that it is impossible to recover the arrears through friendly negotiation. So, we proposed two options for Company A to choose from:

Option 1: In the name of Company A, apply for a “payment order” to the debtor B company through the Taiwan District Court to confirm the claim of Company A and prove that Company B has no repayment ability. The purpose is to provide the accounting treatment of Company A’s finance department. According to the basis, there is no practical significance for recovering the arrears.

Option 2: In the name of Company A, criminal lawsuit against Company B for “commercial fraud”. According to the relevant provisions of the Taiwan Criminal Law on "swindling and profit-making crimes", although Company B has repeatedly stated that it has repaid debts in the case, it has never been executed in the past two years. For example, Company A can obtain sufficient evidence to prove B. The person in charge of the company transferred the company's property during this period, and this part of the assets should be regarded as “fraudulent profit” in the criminal law. Company A can appeal to the court for recovery.

Analysis of the advantages and disadvantages of the two programs, we believe that the initiation of the criminal procedure and its possible consequences will inevitably exert greater psychological pressure on the person in charge of Company B, which may prompt him to initiate reconciliation with private property and restore A. Partial loss of the company. However, even if the head of the debt company does not have assets, even if it is convicted, it will not recover the arrears. In addition, Taiwan's criminal procedure is lengthy and requires a large amount of upfront expenses. If it fails to achieve the expected effect, it will cause A company to suffer greater losses, so it is not enough. Forced to helpless, Company A chose Program One in the end.

Comment on Case Analyse

During the investigation of this case, we found that when the accounts receivable had just expired in early 2004, Company A had called for the arrears by telephone, fax, etc., and had a very strong willingness and repayment ability for Company B. Great hope, until Company B issued a repayment agreement, Company A still hopes to recover the arrears through friendly negotiations. During the self-seeking period, Company A was illusory about the debtor until the debtor had no information and realized the seriousness of the problem. When we received the entrustment, the overdue futures account had been aged for a year and a half, and the recovery prospects were very bleak. During the one-and-a-half-year period, Company A did not take effective measures to put pressure on Company B, nor did it entrust professional institutions to intervene in the recovery. After losing contact with the debtor, it waited for several months and delayed overseas recovery. The favorable timing has resulted in a huge economic loss of more than $500,000.

This case tells us that exporting companies must not be vigilant because of the long history of dealing with old buyers, because the good payment performance of old buyers can only represent history, and the practice of international commercial account collection shows that many overdue accounts receivable The money happened to the old buyers, and the recovery rate was extremely low.

Case 2 recovery strategy should be appropriate

Case Case Synopsis

At the beginning of 2005, the domestic exporter A company clerk met the head of the Malaysian importer B company Mr. Zhang (Chinese) on the Internet. After consultation, the two parties reached an agreement on exporting garlic. The contract payment method was “paying the importer after receiving the goods”. ". Company A successively delivers goods according to the contract, and Company B can basically repay on time. Since then, as the volume of transactions has continued to expand, Company B has begun to gradually default on payment. After the payment was overdue, Company B promised in writing that it would repay in the following months and asked Company A to continue to ship. The salesperson of Company A considered that the previous payment can be recovered, and the company B’s willingness to repay is clear, so he agreed to the request of Company B. However, after receiving the goods, Company B again defaulted and defaulted on Company A’s total payment of USD 220,000. After many times of unsuccessful recovery, Company A entrusted us to participate in the recovery in early December 2005.

After being entrusted, we immediately got in touch with Mr. Zhang of Company B. Mr. Zhang acknowledged all the debts, but said that the company’s current funds are tight and it is impossible to pay all the debts in a short period of time. Under our pressure, Mr. Zhang provided a repayment plan: that he would repay $10,000 at the end of December 2005, and then from February 2006, he would repay $3,000 a month and ask Company A to confirm in writing. . During this period, we investigated the debtor's credit and found that the debtor company's registered capital was only 50,000 US dollars. It was established shortly after the company was formed as a limited liability company. Comprehensive analysis of various factors, we recommend Company A: accepting the repayment plan issued by the debtor and strictly supervising the debtor's performance of the installment payment obligation is a more feasible solution. However, Company A believes that if it agrees with the debtor’s repayment plan, it will take at least six years to pay off all the debts, so it categorically rejects the debtor’s request and asks us to continue to exert pressure on the debtor to force it to pay before the end of 2006. All arrears. After we conveyed the opinions of Company A to the debtor, Mr. Zhang said that he could not pay the arrears according to the requirements of Company A, and then he severed contact with our company. We immediately instructed the recovery channel lawyer to come to the debtor to recover, but unfortunately, after the lawyer found the debtor company, he found that Mr. Zhang had already escaped, the employees had left, and Company B had no property.

Comment on Case Analyse

We know that any rational economic person will choose a recovery strategy that is more conducive to his own interests. But unfortunately, in this case, Company A had a different strategy at two different key points in time. A company's failure to rely on the previous collection strategy occurred when Company B had just begun to overdue. We might use game theory to analyze: When Company B defaulted on $100,000, if Company A was convinced that Company B would pay for the goods, then A The company will receive a return of $220,000 for continued shipments and $100,000 for non-delivery shipments. If Company B defaults on the payment, the possible loss of Company A's continued shipment will be US$220,000 at this time, and the possible loss of non-delivery will be US$100,000. From the perspective of game theory, Company A's choice of “continuing delivery” is not a better strategy. This is because when Company A fails to effectively recover Company B, Company B has already received $100,000 in default. Unusual income, if the payment is made, the abnormal income is zero, and there is additional risk. Therefore, regardless of whether company A continues to ship, Company B's preferred strategy is not to repay, which can make his interests larger. If Company A entrusts a professional recovery agency to engage in recovery, and supervises the repayment of Company B, or requires it to provide corresponding payment guarantee, Company B will have to choose the corresponding repayment strategy under pressure, otherwise it will Faced the risk of being filed for bankruptcy.

The second failure of Company A’s recovery strategy occurred when the debtor was forced to provide repayment plan by our pressure. We might as well do another analysis:

For Company B, when Company A accepts its repayment arrangement, Company B is likely to repay it in succession. If Company A does not accept its repayment arrangement, under our pressure, Company B's more likely response strategy is to escape. For Company A, if you do not accept the repayment plan of Company B, and in the case that Company B is very likely to escape, at most, the property under the name of Company B will be executed. However, the results of the previous investigation have already told us that Company B has limited registered capital and the company is a limited liability company. The possibility of recovering the purchase price is negligible. In summary, Company A accepts the repayment arrangement of Company B, and Company B repays the loan according to the repayment plan. It is a solution that is beneficial to both parties at that time. But unfortunately, Company A is in a hurry and is trying to "complete its efforts" on the debtor, causing its "dogs to jump into the wall", which has caused irreparable huge economic losses.

Case 3 Do not give up the settlement plan

Case Case Synopsis

A Chinese company has signed an export contract worth US$250,000 with a US company. After the contractual payment due date, the US company has not paid for it, and the exporter entrusted our company to intervene. Under the pressure of our company, the US company put forward a settlement of US$220,000 on the grounds of its poor financial position, and promised to repay the arrears in arrears by paying US$20,000 per month. Considering the financial situation of American companies, we believe that if the exporters refuse to agree to reconcile and insist on full recovery, the negotiation process will be blocked or even deadlocked; and once the debtor applies for bankruptcy or escape, the exporter will lose his money. We exchanged a small amount of credits and exchanged most of the repayments, effectively avoiding the expansion of losses, and the pros and cons were obvious. With our strong advice, the exporter finally agreed to the debtor’s settlement requirements and signed a formal settlement agreement with it. As of now, exporters have successfully recovered nearly $200,000 in arrears.

Revelation

1. Exporters must consider the feasibility of repayment while striving for greater benefits. If the conditional debtor of the exporter cannot accept the repayment agreement, the repayment agreement cannot be reached; even if the debtor signs the full repayment agreement, it is futile to fail to comply with the agreement.

2. Litigation and time costs cannot be ignored. Once in the proceedings, the exporter is required to pay fees such as prosecution fees, attorney fees, notary fees, translation fees, investigation fees, and additional execution fees. If the debtor filed a counterclaim, the exporter would also have to pay the lawyer’s fee on an hourly basis to respond. Especially in the United States, the litigation process generally takes a long time and there are many uncontrollable factors. In the long process of litigation, the financial status of the debtor may change at any time. Even if it is better than the final case, the enforceability of the judgment is not optimistic. For example, litigation settlements are common in North America. According to incomplete statistics, the number of cases that have been judged in all Canadian lawsuits is only 2% of the total number of cases. Most cases are settled in court during the proceedings. The way to solve it.

3. It is also difficult to ensure that all arrears are recovered in one lump sum by litigation. No professional lawyer can promise that the litigation case will win the case; even if the case is successful, if the debtor cannot pay all the debts in one lump sum, the court may still agree to the debtor's installment repayment; if the debtor loses its solvency, even if the exporter wins the case, the judgment will also Once the debtor applies for bankruptcy, the exporter can only participate in the distribution of the bankruptcy property as an unsecured ordinary creditor. In practice, the possibility of recovering the arrears is extremely low, and the lawyer must be paid to participate in the bankruptcy proceedings. Additional charges.

4. The settlement agreement is an important piece of evidence in the lawsuit. If the exporter and the debtor have signed a formal settlement agreement, once the debtor is not as repayment, the settlement agreement can serve as an important evidence for the exporter to apply to the court for summary judgment.

Of course, the settlement method must be based on a reasonable and feasible basis. If the conditions proposed by the debtor are too harsh and unacceptable, or the settlement may seriously affect the exporter's own interests, then other methods of recovery such as arbitration and litigation should be considered.

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