During a “normal” downturn in the economy and/or when a business client or customer is otherwise not timely satisfying its obligations, it is imperative that a creditor move quickly to jump ahead of its peers in obtaining, in order, a pre-judgment writ of attachment, attachment liens, a judgment and judgment liens, then immediately thereafter commencing aggressive execution. The failure to do as such will likely mean the difference between a consequential recovery and little-to-no payment for the services rendered or the goods provided.
In these unprecedented times, don’t miss the opportunity to be in first position, and get there quickly, to avoid a disappointing collection. In this environment the other creditors of a defaulting customer are as much of a threat to the satisfaction of unpaid invoices as the actions or inactions of the customer itself.
Especially in periods of fiscal challenge, it is not unusual for a customer’s own receivables to be the only asset available to lien and subsequently satisfy a judgment. It is essential that a creditor obtain the right to access a debtor’s receivables and convert them to cash before other creditors do.
Going after such “third party” receivables has proven to be an effective method of getting our clients paid. As part of the process we closely monitor all other litigation a delinquent customer is involved in, ensuring that the companies we represent stay ahead of the curve.
Notwithstanding this, a creditor of course remains free to attempt to negotiate equitable payment terms with a defaulting customer. That being said, being on the fast track to obtaining priority, liquidating the debt and getting the interest clock running (in California, for example, statutory interest is 10% per annum) is essential to maximizing leverage in debt negotiations.
Most state and federal courts remain open for new filings and many are conducting hearings on writs of attachment telephonically.
While creditors proceeding to enforce their rights at this juncture may be viewed by some with disdain, the fact of the matter is that the viability of many business enterprises will depend upon the degree to which their cash flow is maintained.
By most accounts the financial impact of the pandemic will worsen in the coming months (if not longer), requiring a dynamic approach to risk and receivables management.
While creditors may have several opportunities to work with their customers towards achieving an arrangement which may serve to allow all parties an opportunity to get past their present difficulties, creditors may only get one bite at the apple to see any such repayment plans yield meaningful amounts of cash within in a reasonable time frame.