NACM Oregon
July/August 2012
Business Credit Journal BAPCPA Revisited: A Three-Part Series Analyzing Retail Restructurings Before BAPCPA, Since BAPCPA, and the Future of Retail Bankruptcies Under the Bankruptcy Code
In This Issue
by Lawrence C. Gottlieb, Brent Weisenberg, and Michael Klein This article is Part 3 in a three-part series analyzing the impact of the 2005 amendments to the Bankruptcy Code, commonly referred to as “BAPCPA”, on the ability of bankrupt retailers to utilize the Chapter 11 process to successfully restructure their affairs. Part 1 of this series highlighted the major changes to the Bankruptcy Code enacted by BAPCPA. In Part 2, we analyzed the impact of the BAPCPA amendments on retail reorganizations. In this third and final installment of the series, we will discuss how BAPCPA is likely to shape retail bankruptcies in the coming years.
As we noted in our prior articles, BAPCPA’s numerous amendments and modifications to the Bankruptcy Code have profoundly impacted the Chapter 11 process to the point that it is nearly impossible for retailers to reorganize regardless of the prevailing national and international economic conditions. Time and again in the seven years since its enactment, BAPCPA has significantly impaired the ability of retailers to obtain the necessary postpetition financing and breathing room from creditors to test and implement a reorganization strategy, regardless of the debtor’s capital structure, the fluctuating state of the credit markets or the extent to which they compete with large discount retailers and online retailers. As a result, retail cases have invariably taken one of two forms: either the case is filed as a liquidation or the debtor is given a small window within which to conduct
BAPCPA Revisited, Part III....... 1 Chair’s Message...................... 2 Member Profile....................... 3 NOF Scholarship Funds............ 5 Personal Guarantees & Consumer Credit Reports Q & A............... 6 Credit Congress Pics................ 7 International Corner................ 10 BCLC Webinars....................... 11
a going concern sale under Section 363 of the Bankruptcy Code that typically generates enough value only to satisfy administrative and secured creditors.
Education Schedule................. 11
We fully anticipate that this trend will continue unabated in future retail bankruptcies, as the window within which retailers can successfully reorganize gets smaller and smaller. The last few years have witnessed a rise in the use of so “called “prepackaged” and “prenegotiated” bankruptcies as a mechanism by lenders—most often private equity firms owning second lien debt -- to
New Member Introduction....... 13
Certified Credit Group Administrator.......................... 12
Legislative Corner................... 15 Social Media........................... 16 Contacts................................. 19
...continue on page 17
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NACM Oregon
July/August 2012
Business Credit Journal Message from the Chairman Now that it is July, we all hope that
we can start living better weather rather than just dreaming about it. It is “spring” in the Pacific Northwest and many of our members are counting down to a vacation that still seems far in the future, but not me, this year. I took an early vacation in May, so now my thoughts are on our organization and how we can increase our membership. As with any membership organization, we work to sign up new members every year that are then able to take advantages of the many services we provide as in education offerings, credit reporting services, and our collection services. Unfortunately, we also lose members each year due to numerous reasons including company consolidation, outsourcing, mergers, and headquarters’ moves. In order to keep NACM Oregon a vital part of credit function, we as members always need to be on the lookout for new members in our fields that would be able to benefit from a membership to our organization. NACM Oregon provides incentives for new member referral. If you start receiving credit reference requests from an organization and you are not sure if they are a NACM Oregon member, contact us and we will research whether they are a member or could be a potential member. If you hear of a company moving into our area, asking about credit resources, or growing to the point where they form a credit department give NACM Oregon a call. Together we can keep our organization as relevant today as it was in 1896 on the date of our founding. John Hardy Emerson Hardwood Co. jhardy@emersonhardwood.com
National Summary of Domestic Trade Receivables Results 2nd Quarter 2012 We have received the results of the National Summary of Domestic Trade Receivables (DSO) for the second quarter of 2012. This quarterly survey will re-open on October 1, 2012, when data will be gathered for the 3rd quarter of this year. Please circulate this link among your peers to get responses in your industry. The Credit Research Foundation (CRF) has been producing this valuable quarterly report for more than 50 years. DSO slightly increased from the prior quarter to 39.85 from 39.25. A year ago the measure was 40.20. Best Possible DSO decreased to 31.90, as compared to 32.00 last quarter and 31.60 a year ago. Average Days Delinquency decreased to 4.80 from 5.30, as compared to 5.57 a year ago. The percent reported over 90 days past due increased to 0.50 as compared to last quarter at 0.41, as compared to 0.70 a year ago. Medians for 32 different industries are included in this summary. If any SIC code has less than three responses, it will not appear in the report. Please contact NACM Oregon Customer Service or your Account Executive for a copy. Now that you’ve done the NSDTR, if you really want to see how you’re doing, you’ll want to participate in CRF’s comprehensive Benchmarking survey. You can do that at: http://www.crfonline.org/surveys/benchmarking/ benchmarking.asp. Get the $1,500 report FREE!
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NACM Oregon
Business Credit Journal
Member Profile
A
Sussman Shank, LLP
s a business lawyer with over forty years experience at Sussman Shank in Portland, Oregon, Barry Caplan specializes in Chapter 11 bankruptcy and receivership law. Growing up in Portland, where his family owned a sporting goods store, might explain Caplan’s pragmatic approach to business law. “I learned a lot of values from watching my dad in business,” Caplan says. “I learned sales techniques, which, believe it or not, helps in practicing law. Being persuasive is how to be an effective lawyer. It’s not about winning arguments, it’s about finding a solution to a problem. There’s a lot of problems that can be solved much easier than they are.”
July/August 2012
restructuring group is one of the largest of its type in the Pacific Northwest. “My preference would be that all businesses are successful,” says Caplan, “especially those we represent, and fortunately most of them are.” But he admits that specializing in law that handles business’s “worst-case scenarios” can be both rewarding and challenging. “Businesses in difficult situations require unusual skills.” Caplan was representing an electrical distributor who ran into a series of unexpected problems that put the distributor in tremendous financial risk, both personally and professionally. Caplan couldn’t prevent the business from folding, but his client didn’t lose any personal money. When the owner went to work at another much larger electrical company, he recommended Caplan be retained ...continue on page 4
His focus on business deepened as he left for Seattle to attend the University of Washington, where he graduated with a business degree. After he graduated from the University of California School of Law, Caplan returned to Portland, working as a Multnomah County assistant district attorney. After nearly three years in the DA’s office, Barry Caplan landed the job he had wanted since graduation and joined Sussman Shank in 1968. Still in its early years, (Caplan was hired by the partners as the fourth attorney) Sussman Shank was founded by lawyers who specialized in bankruptcy. As a firm focusing on business law, Sussman Shank, with almost seventy employees and thirty lawyers, is now a full-service business firm. Its bankruptcy/
Barry Caplan, Partner, Sussman Shank, LLP
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NACM Oregon
Business Credit Journal Member Profile, continued from page 3 as its lawyer. “I felt very good that someone who had experienced significant problems recommended me, and said that I saved his life.” It was the prompting of Caplan that resulted in Sussman Shank joining NACM in 1988. He had taken a client on whose business was providing adult care services. Finding a solution for the client’s debt load that didn’t involve Chapter 11 brought Barry Caplan and his client to the doors of NACM Oregon. The client and its creditors constructed a Work Out plan championed by NACM that turned into a win-win for everyone. The creditors got their money, the business succeeded, and eventually expanded. And, as Caplan tells with a smile, they kept him on as their lawyer. It was Caplan’s first experience with NACM Oregon and it was a positive one. He started attending some of the events, classes, and golf tournaments. He was asked to speak on several topics and eventually recruited several others in the firm to speak—like Bill Fig, who writes the Legal Corner column and has spoken and taught at many NACM Oregon events and webinars. In recent years, Sussman Shank has worked as NACM Oregon’s collection lawyer and the firm has assisted in some work out plans. Caplan’s personal contributions include sitting on the Board from 1993-1999, during a period of NACM transition, and eventually serving as the Chairman from 1997-1998. Sussman Shank’s ongoing goal is to improve credit professionals’ understanding of their industry’s specific legal challenges, when they can do some things on their own, and when is the best time to consult a lawyer. As he points out, “Spending some money on a lawyers’ time early can help avoid spending a lot more money on lawyers’ time when it’s too late.”
July/August 2012
Credit Card Purchases May Soon Carry a Surcharge VISA and MASTERCARD have agreed in a settlement of a long-standing court battle to allow merchants to Surcharge customers for interchange fees. Call them “swipe fees,” “checkout fees,” or “surcharges,” consumers may have to deal with a new expense at the register if they pay with a credit card, thanks to a $7.25 billion settlement reached Friday. The settlement, which is pending court approval, may come to fruition in late 2012 or early 2013. There are some consumer safeguards to curb abuses, the Electronic Payments Coalition noted: • “Merchants are only allowed to assess a fee that is equivalent to what they pay to accept credit cards—which in the U.S. is typically between 1.5 percent and 3 percent. • Consumers can only be charged checkout fees for credit card usage. Merchants cannot charge customers for the use of their debit card.” Retailers must disclose the fee on the receipt, at the point of sale and at the point of entry, according to The Consumerist. Currently, surcharging is illegal in 10 states: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.
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NACM Oregon
July/August 2012
Business Credit Journal
NACM-Oregon Foundation Scholarships For the Remainder of 2012 The NACM-Oregon Foundation grants scholarships to credit professionals for continuing education, professional designations, and conference expenses. The Foundation manages two scholarship funds: the NACM-Oregon Scholarship Fund and the Phylliss Clark Memorial Fund. The Foundation is offering scholarship to the following events: CFDD National Conference September 19-21, 2012 Seattle, Washington
Western Regional Credit Congress October 18-20, 2012 Las Vegas, Nevada
Five (5), $500 scholarships.
Four (4), $500 scholarships.
Deadline: September 7, 2012
Deadline: September 28, 2012
Phylliss Clark Memorial Scholarship for First-Time Attendees September 19-21, 2012 Seattle, Washington
Certification Fees
NOF will award one, $500 scholarship each to both Salem and Portland CFDD Chapter members to attend the CFDD National Conference in Seattle, Washington.
$1,000 total
Deadline: September 7, 2012 Western Regional Credit Congress for First-Time Attendee October 18-20, 2012 Las Vegas, Nevada NOF will award one, $500 scholarship to any NACM Oregon member first-time attendee to the Western Regional Credit Congress. Deadline: September 28, 2012
$1,000 total Seminars and Classes for Certifications
To apply— 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 lrice@pacificmetal.com. Submit applications to:
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.
Lourdes (Lou) A. Rice, NOF Scholarship Committee Board Director Pacific Metal Co. 10700 SW Manhasset Dr. Tualatin, Oregon 97062 p: 503.454.1051 f: 503.454.1065 e: lrice@pacificmetal.com
Recertification Connie Woodward-Haas Steelscape, Inc. Congratulations are in order for Connie on her recent CCE recertification designation achievement. NACM Oregon recognizes Connie’s accomplishment and applauds her success.
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NACM Oregon
Business Credit Journal
July/August 2012
Personal Guarantees & Consumer Credit Reports Did you know the Fair Credit Reporting Act (FCRA) gives companies the authority (permissible purpose) to pull consumer credit reports if the consumer provides written authorization?
Q & A— Q: What is a personal guarantee? A:
A personal guarantee is a pledge, by someone other than the named borrower, that he or she promises to pay any deficiencies on a specific loan.
strength of the guarantee, should you have to enforce it. By looking at the consumers personal finances, you can get an idea of their credit worthiness, and an indication of how they will run their business. You must have written authorization to pull the consumer’s credit.
Q: To what extent is the individual liable?
Q: What if someone refuses to sign a personal guarantee?
A: Most guarantee forms require joint and several liability, meaning that each individual who signs a guarantee can be held responsible for the whole amount of the loan. Consequently, even if someone is only a 10 percent owner in the business, that person is personally liable for 100 percent of the amount being guaranteed. The guarantors can be sued individually or all together.
A: This is a judgment call, as you are now basing the credit risk directly on the partnership or corporation, and have fewer avenues of recourse if the account defaults.
Q: When is a personal guarantee used? A: A personal guarantee is often used when a company cannot demonstrate enough business assets or history to support the limit desired. Q: How can I use consumer credit reports with a personal guarantee? A: Consumer credit reports can be used in conjunction with a personal guarantee, to judge the
Q: Why should my company use consumer credit reports with a personal guarantee? A: Consumer credit reports will indicate your potential clients credit standing, credit capacity, character, general reputation, and mode of living. All of which are a must when holding an individual accountable to a personal guarantee. The main reason is to be able to collect the monies owed even if the company is protected under the bankruptcy laws. Q:
answer NO! So, what good does it do to require a personal guarantee without investigating the credit capacity, character, and general reputation of the individual? A:
Even if you take a personal guarantee you need a tool to help determine credit worthiness. By analyzing the principle/ personal guarantor(s) consumer credit report you will be able to make a more educated credit decision, which could save you thousands of dollars and help eliminate potential bad debt.
This material is for informational/educational purposes only and is not intended to replace legal counsel.
Reprinted with permission. Consumer credit reports from all three credit bureaus (Equifax, Experian, and TransUnion) can be accessed through OneCreditSource.com, an NACM Oregon partner. For more information, contact your account executive.
Would you extend $20K worth of materials to a contractor, small private company, or a start-up without a personal guarantee? Most would
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NACM Oregon
Business Credit Journal
July/August 2012
2012 Credit Congress Pics NACM’s 116th Credit Congress and Exposition held from June 10-13, 2012, at the Gaylord Texan Hotel and Convention Center, in Gaylord, Texas, was a great success! Over 1,000 credit professionals attended this year’s event, setting a five-year attendance record. NACM’s Credit Congress is the industry’s largest gathering of credit professionals, where attendees can network, attend workshops, learn about pending legislation affecting the industry, and more.
The Portland Group
(L) Martha Anderson, CCE, browses through the NACM Book Store. (R) Pictured l to r: Lori Jones, CCE; Lori Kimball, CBF, NORPAC Foods, Inc.; and Kathy Hamilton, CCE, SAIF, Corporation check out the Silent Action lists.
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NACM Oregon
Business Credit Journal
July/August 2012
During the Super Session, individuals were recognized for their designation achievement. Standing in front is Lisa Stein, CCE, Olshens Bottle Supply Co.
Lori Jones, CCE, places her bid on an auction item. Some of the items up for auction included: elegant jewelry, purses, iPods, Kindles and iPads, trips to relaxing vacation destinations, and NACM regional credit conferences.
Seated together at the CFDD annual luncheon (l to r): Jacci Barrows, CCE, ICCE, Area Director for Direct Members, Omaha/ Lincoln, Nebraska, Tampa, Florida, Chapters, and President of the Denver Chapter; Charlene Gothard, Area Director for Portland, Salem/Albany, and Dallas/Forth Worth Chapters; and Barbara Condit, CCE, National Vice Chairman of Member Services.
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NACM Oregon
Business Credit Journal
July/August 2012
Improving the Effectiveness and Efficiency of the Credit Function There are a number of ways to make your credit and collections function more effective and more efficient, including these: • Recognize the credit department staff is the department’s most valuable resource. • Assign a mentor to new team members. • Promote from within whenever possible to encourage team members to excel and so they know their efforts could be rewarded. • Develop written processes and procedures as both as a training and a reference tool. • Make certain that new employees receive both orientation and training, in contrast to a common approach of throwing them in with little or no preparation. • Within reason, do what you can to keep your best and most talented performers. • Don’t play favorites. Perks such as choice of assignments should be based on merit, not on longevity or on favoritism. • Make the time to train, coach and mentor every member of the credit department. • Remember the only thing worse than losing an employee that has been trained is keeping an employee who is untrained or poorly trained. • Be extremely selective in the hiring process. The extra time you spend finding the ‘right’ employee will pay big dividends in the long term. • Provide opportunities for individuals who demonstrate an interest in accepting new challenges and proving their worth. • Look for new time saving software, especially software that simplifies or automates previously labor intensive and repetitive tasks. • Assign your most difficult accounts to your most experienced collectors. Don’t make the mistake of always assigning your largest accounts to your most experienced personnel. • Don’t become overloaded with the almost limitless amounts of information available to you. Instead, try to set limits on the amount of information you review before you make a decision. • Remember that delivering bad news is never easy, and that bad news does not get better when it gets older… so deliver bad news to salespeople, applicants and customers sooner rather than later. • Rather than announcing a past-due account is going on hold, consider warning the customer (and sales) that if the past-due balance is not paid by a specific date that the account will go on credit hold.
We are excited to announce that Experian has joined forces with Moody’s Analytics to create the new Experian/Moody’s Analytics Small Business Credit Index — a detailed, quarterly report on the health of U.S. businesses. The index replaces the Experian Business Benchmark Report and shows fluctuations in the market factors that are impacting the business economy. Q1 2012 highlights The Q1 2012 report shows that although access to credit remains tight, U.S. commercial credit conditions are improving, with fewer small businesses falling behind on bill payments.
“The Q1 analysis has shown that small businesses are finally getting some relief from the credit crunch that has plagued many of them since the Great Recession. The recent improvement in small-business credit growth and quality bodes well for the broader economy and job market.” — Mark Zandi, Chief Economist at Moody’s Analytics Download the Full Report Other trends seen in the Q1 Experian/Moody’s Analytics Small Business Credit Index include: • The overall health of U.S. small businesses has improved, thanks to rising consumer confidence and spending, but balance sheets are strengthening unevenly. • Most metrics of small-business credit quality were essentially unchanged from last quarter, but the average commercial risk score improved on a year-ago basis due to a drop in the percentage of dollars delinquent. • Not surprisingly, states where the labor market is healing more vigorously typically have small businesses with stronger credit standings. Similarly, small firms in states with high unemployment and lackluster housing markets are struggling.
© 2011 Michael C. Dennis. All Rights Reserved
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NACM Oregon
July/August 2012
Business Credit Journal International Corner,
by Alice Knight, RGCP
Summer is here, at least according to the calendar, and thoughts turn to vacation time. Much of Europe basically closes down for 4-6 weeks during the summer for everyone to enjoy a long vacation. Vacation used to mean time away from work to relax and enjoy friends and family but the term has become somewhat blurred. With all the current technology many people are plugged in to work almost 24/7 including vacations and holidays. A recent survey by data protection Company Neverfail found that 83% of workers surveyed check their emails after work hours, 66% take their work-related devices with them on vacation, and 50% reported answering emails during meals. In the international arena different time zones often require availability during odd hours for day-to-day activity but what about vacation time? Most mental health and human resources personnel agree that vacation downtime is important and should be encouraged. Many companies give lip service to this but still expect their employees to be available, current, and able to handle problems even when on vacation. One company that I know requires its partners to take a minimum of 30 consecutive days of vacation every three years. The employee is removed from technological contact with the company or with their customers during this time. The company feels that this is good for both the employee and the customer. The employee can relax and recharge, the customer is reassured that there are
other employees fully capable of handling their account. Why is it so difficult for some people to disengage? For many people their self esteem revolves around work. They feel valued for their ability and work ethic. What if someone does a better job while I’m gone, or worse yet, what if no one notices that I am gone are scary possibilities. There are also perfectly realistic concerns about possible problems during your absence. The best way to prepare for a worry free time away from work is to constantly train your replacements. One of the best pieces of advice I got many years ago from a veteran manager was to always view training your replacement as an important job duty. Training your replacements is a continual task. It is ego enhancing to have people come to you for answers. Often giving them the correct answer is the quickest and safest course of action but it is not training. All it does is encourage them to come to you for answers. The key is to explain why you gave that answer. In one off situations that is not practical or even helpful but with people you deal with frequently it is necessary. In our business, flexibility is the norm and critical for our success. It is extremely important that I explain why I said “no” one time and “yes” the next time in seemingly similar situations. By explaining the reasoning behind the answer they can learn to evaluate the situation and anticipate my answer. Over
time they should be capable of making many of these decisions themselves. Encourage people to tell you what answer they think you should make and why. If you disagree explain why. When they do make decisions and things go wrong, and they will, be supportive. Go through what went wrong, why, and what should be done differently in the future. People will never learn to effectively make decisions if they are constantly second guessed and criticized. Enjoy your vacation. If you have done your job your office will survive. Of course if you read in the paper that your company burned down or that nuclear war has been declared you might want to check in.
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.
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NACM Oregon
July/August 2012
Business Credit Journal Business Credit Learning Center Webinar Schedule Phone Power Collections August 8 9-10 a.m. (PT)
Certification Roadmap Introduction September 11 11:30 a.m. - 1 p.m. NACM Oregon Classroom Free to members—lunch included! Guest Speaker: Marilyn Rea, CCE, Pacific Architectural Wood Products
Ratio Analysis August 14 9-10 a.m. (PT) Doing Business with China: The Dragon and the Gift August 15 9-10 a.m. (PT) Implementing a UCC Program: Overcoming Obstacles August 22 9-10 a.m. (PT) Developing a Credit Policy to Boost Performance August 24 9-10 a.m. (PT) Credit Analysis Basics August 28 9-10 a.m. (PT) Information Security, Credit Cards & document Retention September 13 9-10 a.m. (PT) Unclaimed Property Compliance in the State of Oregon October 11 9-10 a.m. (PT)
On-site Education Class Schedule
Building Blocks to Successful Credit Management Series Webinar fee:
$45 each for members or take all 4 classes for $145!
$79 each—member $109 each—nonmember
50% discount to new members as of January 1, 2012.
For a complete list of webinars and descriptions, please visit www.businesscreditlearningcenter.com.
.2 CEU each
If you have any questions on any of the webinars, call Elizabeth Heintz at 971.230.1120, or eheintz@nacmoregon.org. Schedules are subject to change.
Fundamentals of Credit Risk September 6, 7:30-9:30 a.m. Making Effective Credit Decisions September 13, 7:30-9:30 a.m. Credit Enhancements: Tools to Improve the Likelihood of Payment-in-Full September 20, 7:30-9:30 a.m.
How Do I Manage Risk and Maximize My Company’s Revenue Opportunities? October 25 8:30-11:30 a.m. Hyatt Place at Cascade Station $95/members CEU: .3, Course Level: Advanced Guest Speaker: Robert S. Shultz, Founding Partner, Quote to Cash Solutions (Q2C) Building Blocks to Successful Credit Management— All Day Session $145/member; 50% discount to new members as of January 1, 2012. November 7 8:30 a.m.-4 p.m. NACM Oregon Classroom CEU: .65, Course Level: Core Doing Business in Canada November 9 8-11:30 a.m. Hyatt Place at Cascade Station $95/members CEU: .35, Course Level: Intermediate Guest Speaker: Hubert Sibre, Partner, Davis LLP
Effective Collections September 27, 7:30-9:30 a.m. Reporting Success to Management September 27, 7:30-9:30 a.m.
Registration To register for on-site classes, please call Elizabeth Heintz at 971.230.1120 or email eheintz@nacmoregon.org
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NACM Oregon
July/August 2012
Business Credit Journal
Certified Credit Group Administrator The Certified Group Administrator (CGA) program was created through a collaboration between NACM National and the Affiliate Council, which represents the 35 NACM Affiliates around the country. This NACM program provides specialized education and training to credit group administrators. Topics include meeting planning, working with providers such as hotels and restaurants, meeting process, and antitrust laws and application to industry credit group meetings. Upon successful completion of the program, the following individuals were awarded the CGA designation. We believe this training is crucial to the success of NACM Oregon industry credit groups.
Shannon Abnal
Caroline Anderson
Richard Browing
Since 1997, Shannon has been responsible for data contribution from NACM Oregon members. Presently, she oversees the processing of more than a million lines of data each month, which is provided to one or more of three repositories (Experian, Equifax, and NACM). Earlier this year, Shannon added Group Services management to her responsibilities.
Caroline has worked in the NACM network for more than 10 years. She joined the NACM Oregon staff in September 2011 as a National Account Executive. She earned her CGA in October 2011.
Kristen McBride
Clara Nemeth
Denise Redding
Kristen joined NACM in January 2010 as an Industry Group Coordinator. She has more than 20 years in meeting planning. Kristen earned her CGA designation in August 2011.
Clara joined NACM in 2011 and currently serves as an Account Executive. She has marketing and accounting degrees and was formerly a Key Business Consultant for D&B. She earned her CGA in August 2011.
Richard has worked for NACM Oregon since 2004. In October 2010, he moved to an Industry Group Coordinator position. Richard earned his CGA designation in August 2011
Denise joined NACM in 1999 and currently serves as an Account Executive. Denise earned her Credit Technician Certificate from NACM Oregon in 2003 and her CGA in 2011.
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NACM Oregon
Business Credit Journal
July/August 2012
New Member Introduction NACM Oregon extends a warm welcome to the following new members: ABC Supply Co.
Compview, Inc.
Kris Citera 760.497.6900 5621 Palmer Way, Suite G Carlsbad CA 92010
Judi Duff 503.601.5533 10035 SW Arctic Dr. Beaverton OR 97005
Since our start in 1982, ABC Supply Co., has become the largest wholesale distributor of roofing in the United States and one of the nation’s largest distributors of siding, windows, and other exterior building products, tools, and related supplies.
CompView was founded in 1987, by Paul White as the first dealer for InFocus Systems. Headquartered in Beaverton, Oregon, with offices in seven major cities, the company now provides audio visual design, engineering, programming, installation, and consultation.
Columbia Construction DBA: Columbia Roofing & Sheet Metal
Gaylord Industries
David Thom 503.218.2278 18525 SW 126th Place Tualatin OR 97062 Founded in 1998, by Mark Carpenter, Columbia Roofing & Sheet Metals started by doing small repairs that built into a successful business model of helping owners make financial sense out of roofing repairs and replacement. They now do work in Oregon, Washington, Idaho, and California with a year around staff of over 50 people. Columbia Seeds, LLC Brenda Webster 541.757.1468 887 NW Grant Ave. Corvallis OR 97330 Established in 2002, Columbia Seeds® is located in the heart of the world’s seed capital, the Willamette Valley in Oregon. The local climate is ideally suited to cool season grass seed production. The valley’s wet, mild winters and warm, dry summers result in the highest quality grass seed in the world. Local ports, rail terminals and freight companies allow for fast and effective shipments worldwide.
Lori Jacobsen 971.223.1268 10900 SW Avery St. Tualatin OR 97062 Founded in 1936, Gaylord Industries, division of the ITW Food Equipment Group, is a leading manufacturer of premium quality commercial kitchen ventilation systems. Core food service market segments served include: Full Service Restaurants, School/University, Hotels, Business & Industry, Military (land bases and ships), Hospital/Healthcare, Prisons, Theme Parks, and Casinos. Henry-Lee & Company, Inc. DBA: Henry & Belle Kathy Kalina 312.242.2500 549 W Randolph St., Suite 501 Chicago IL 60661 Henry Mann and his wife, Belle, first started designing in the garment district of Chicago in 1931 and were dedicated to creating high quality denim. Inspired by Belle’s confident character and chic sophistication, Henry designed each style with Belle as his muse always focusing on the highest quality fabrics and finishes. Today the Mann family continues to fulfill this tradition of craftsmanship and humanitarianism.
IntegraTurf, Inc. Michelle Marsonette 541.791.4447 225B Broadalbin St., SW Albany OR 97321 Located in the Willamette Valley, the grass seed capital of the world, IntegraTurf is where integrity and grass seed come together. With the perfect climate for growing grass seed, 60% of the world’s grass seed supply is grown here by growers who are well known around the globe for producing exceptional quality. IntegraTurf only works with the best growers and the most reputable suppliers in the valley. Lewis Seed Co. Kathleen Killinger 541.491.3700 31810 Fayetteville Dr. Shedd OR 97377 Lewis Seed was founded in 1997 by Monte Lewis, a successful seed farmer in the Willamette Valley of Oregon. Like his farm, he built the company on a commitment to integrity, hard work and exceptional service. That commitment has firmly established Lewis Seed as a worldwide production and marketing company. Lewis Seed works with multiple universities and private breeders in order to bring the best turf and forage varieties to market through proven growers dedicated to producing high quality seed.
...continue on page 14
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NACM Oregon
Business Credit Journal
July/August 2012
New Member Introduction, continued from page 13 PPM Technologies, LLC Denise Holloway 503.537.5314 500 E Illinois St. Newberg OR 97132 Early in 1892, W. K. Allen purchased a small fruit processing plant in Newberg, Oregon, which became known as Allen Fruit Company. Initially, they cooked fruit in cast iron kettles. They later developed food evaporators, starting a chain of patented food processing innovations. Allen Machinery was formed in 1955, to build conveyor and other equipment for the food processing industry. PPM (Potato Processing Machinery) was started in Sweden in the 1980′s by two founders who developed a unique frying process, which they began marketing to the potato processing industry. In the mid 1980′s, the PPM business was acquired by Frigoscandia, which ultimately became part of FMC Technologies, Inc. In 2000, FMC Technologies, Inc., purchased Allen Machinery and became a global leader providing mission-critical technology solutions for the energy, food processing and air transportation industries. The parent company subsequently made a strategic decision to divest Allen/PPM. This transition was completed in mid-2007, whereby PPM Technologies, Inc. was born. Today, PPM Technologies, LLC is a global supplier to the food processing industry, with operations in the Americas, Europe and Asia. Pure Seed Dean Hebner 503.263.0724 29975 S Barlow Rd. Canby OR 97013 It’s all about “Quality.” Our network of companies was founded on this principle: Roselawn, Pure-Seed Testing, and Pure Seed (FKA: Rose Agri-Seed). This was true five decades ago when we first got started and it’s just as true today. The Rose family has spent a lifetime developing and producing innovative turf, forage, and erosion grasses. Together we strive to focus on reducing environmental and
economic pressure while building tolerance to specific stresses.
in the region. We have 18 Northwest locations serving you.
Seed Research Inc. DBA: Seed Research of Oregon
Stumptown Coffee Corp.
Cheryl Friedel 541.766.3914 27630 Llewellyn Rd. Corvallis OR 97333 Seed Research of Oregon was founded in 1983 on the understanding that the professional turf market – especially golf courses – badly needed improved and unique grass seed varieties. So we partnered with the university community, adapting our applied expertise to their research. Decades later, our culture is still one where the ideas of our customers lead to breakthrough products like salt-tolerant turf varieties. For our innovative bentgrass we have been granted patents and recognized with a number of industry awards. Southwest Products Corp. Kristi Field 360.887.7439 5142 W Roosevelt St. Phoenix AZ 85043 For over 50 years, Southwest Products Corporation has been a leading provider of industrial diesel engines to the southwestern U.S., supplying regional equipment manufacturers with high quality diesel and gaseous power solutions for a variety of applications. Southwest Products Corporation also builds custom generator packages, specialty service vehicles and most recently, custom industrial tanks, providing these products to public and private sectors across North America. Star Rentals, Inc. Heidi Lindgren-Boyce, CCE 206.805.2109 1919 4th Ave., South Seattle WA 98134 Established as a family-owned business in 1900, Star Rentals supplies industrial equipment to businesses large or small. We’ve evolved to meet today’s construction equipment needs and work with leading construction professionals
Andrea Manning 503.236.7183 2376 SE 45th Portland OR 97215 Locally owned and founded in 1999 by Duane Sorenson, Stumptown Coffee is often credited with transforming Portland into one of the world’s best—and coolest—places to drink coffee. The company has an international reputation for purchasing the highest-quality beans, operating with high ethical standards and remaining absolutely, fiercely independent. Stumptown now has five locations in Portland, two in Seattle, and two in New York. Tigard Sand & Gravel LLC Roger Metcalf 503.254.5517 21455 SW 120th Ave. Tualatin OR 97062 Tigard Sand & Gravel has been serving the Portland metro area since 1936. They provide complete services for roads, subdivisions, yard, and warehouse areas. They carry crushed rock, drain & quarry rock, all types of sand, cold mix asphaltic concrete, and hot mix asphaltic concrete. Turf Merchants, Inc. Laura Nova 541.926.8649 33390 Tangent Loop Tangent OR 97389 For nearly three decades, TMI has been developing, producing, and marketing turf grass seeds for the United States, North America, and more than 20 other countries around the world. Through our distributor partners, we have developed a wholesale seed distribution system that is one of the most efficient in operation today. We also offer regional mixtures of our own “wild things” wildflower seeds.
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NACM Oregon
Business Credit Journal Legislative Corner
• Current support: OEA, SEIU, AFSCME, Oregon PTA, Stand for Children
by Cindy Robert Some of our members may be wondering about the corporate kicker issue likely to make the ballot in November. Business associations who had previously said they would not oppose the repeal of the kicker if dollars went to education, are now rethinking because the current version is poorly written and may just allow the state to supplant education dollars, not actually increase them. You decide….. Corporate Kicker History • If revenues from the corporation income tax exceed their forecast by more than 2 percent, then all revenue in excess of the forecast is refunded to corporations. • Legislature may vote to suspend with 2/3 approval (added via ballot measure in 2000). • Passed in 1979. Year 89-91 91-93 93-95 95-97 97-99 99-01 01-03 03-05 05-07 07-09 09-11
July/August 2012
Triggered %surplus None Suspended to balance budget 50.1% 42.2% None None None 35.9% Suspended and diverted to Rainy Day Fund None None
Initiative Petition Efforts • Our Oregon (union coalition started by OEA and SEIU) is circulating Initiative Petition #35. • 116,283 valid signatures will be required to be placed on November Ballot. • If passed, changes effective July 1, 2013. • AFSCME and SEIU have already made $100,000 contributions each.
• Current opposition: Taxpayers Association of Oregon (Don McIntire Group) • Taking “neutral” position: AOI, PBA • The most recent poll showed 61% of Oregonians willing to repeal the corporate kicker—and that was without dedication to specific purpose (just back to general fund). Initiative Petition Verbiage • Currently, the Constitution says: “If the revenue received by the General Fund from corporate income and excise taxes during the biennium exceeds the amount estimated to be received from corporate income and excise taxes for the biennium, by two percent or more, the total amount of the excess shall be returned to corporate income and excise tax payers.” • The ballot initiative deletes the section I have bolded and replaces it with “retained in the General Fund and used to provide additional funding for public education, kindergarten through twelfth grade.” • Under the proposed ballot initiative there is no reserve, emergency or stability fund established. • The proposed language sends money back to the General Fund to be used for K-12 education, but has no provisions on how—is it above and beyond the State School Fund allocation, or can it supplant those dollars?
Cindy Robert has been lobbying the Oregon State Legislature for almost two decades, with clients ranging from local governments to fortune 500 businesses to non-profits. Cindy is an expert in all aspects of government relations, legislative strategy, campaign development and advising, organizational development and governance structure, corporate partnership and leveraged packaging.
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NACM Oregon
July/August 2012
Business Credit Journal
Reasons to Be Wary of Using Social Media When Discussing Customers
S
ocial media in business is no longer considered a tool for the future. So, in a rush to not fall behind the competition, there’s an increasing premium being placed on implementing social media into everything from promoting a business’ brand to gathering information on deadbeat debtors. But it’s also easy to get lost along the way when using it, as social media works somewhat like the old “Wild West” with vagaries for what is ethical and legal. One of the trickiest areas is the business-to-business exchange of customer information. While it may seem harmless, a credit professional can find himself/herself with a significant headache by letting their guard down, a hallmark of the instant information world. Fact is, most credit group veterans and administrators will tell other credit professionals that there are great applications of social media connectivity to credit and collections, but the information traditionally exchanged in official credit groups is not one.
contact, telephone calls and even other Internet offerings like email and blogs. In short, it’s easy for even guarded individuals to find themselves in a situation where they say, “Why did I just post that?”
Here are some of the key reasons why:
•
Who is watching? The bottom line is: you don’t know the answer to that question in the free-flowing social media world. Unlike in the environment of an in-person credit group, it’s hard to tell who has access to the information being discussed and whether it’s been forwarded on to other parties, be them competitors or delinquent vendors that can, and do, become angry when they’re the subject of negative information-sharing.
• It’s amazing what people (even you) will share. Countless studies and anecdotal findings illustrate that users of social media are much more relaxed and quicker to share all sorts of information, including information that should be considered privileged, than they are during in-person
•
There are no warnings. Sit down in a credit group meeting and a credit professional receives a briefing on what’s allowed and what’s not (such as direct discussion of terms and pay performance versus discussing days beyond terms). The warnings and
disclaimers can help keep a credit professional on course, so to speak, even if he or she is angry and emotional about an overdue account. In social media, giving in to emotion to make a knee-jerk post can be all too easy, and that can land your credit/collections department in legal trouble such as defamation and antitrust violations.
•
Comments don’t go away. Let’s say a credit professional makes an offhand comment about a debtor they regret. Just delete it and it’s like it never happened, right? That’s often far from the truth. As too many have found out—from politicians to credit professionals to job-seekers—once information is posted out there on the Internet, it can continue to exist beyond your attempted deletion and often, someone can find it. There’s a cottage industry growing of companies offering, for a fee, to research and compile information about people or businesses entirely from social media entries, past and present. It’s akin to deleting something from a computer…odds are, some techie can still find it somewhere on your computer/laptop hard drive. There are a growing number of prisoners in U.S. custody that can tell tales of that very occurrence.
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NACM Oregon
Business Credit Journal BAPCPA - Part 3, continued from cover effectuate their goals in Chapter 11 without having to undergo the time and expense associated with even the most fast-track traditional filings. In a prepackaged—or “prepack”—bankruptcy, the plan of reorganization has been voted on and accepted by the major classes of creditors prior to the bankruptcy filing, and the company can emerge from bankruptcy in as little as 45 days. In a “pre-negotiated” bankruptcy, the plan of reorganization, which typically provides for little or no return to unsecured creditors, has been substantially negotiated with the major secured parties prior to the commencement of the case, and all that is left post-filing is the solicitation of votes and the confirmation of the plan. In these cases, which can take 3 to 4 months to complete, unsecured creditors are provided with a small window to use whatever leverage points may exist in order to improve their treatment under the proposed plan. It is our expectation that, in the near future, virtually all retail bankruptcies will either take the form of a prepack plan, a prenegotiated plan, or an exceedingly short going concern sale process followed by a full-chain liquidation. In each of these types of Chapter 11 cases, the company’s prepetition lenders keep a tight grip on the proceedings through exceedingly restrictive debtor-in-possession financing facilities that enable the company to do little more than effectuate whatever changes to the capital structure those lenders wish to see, which almost universally take the form of a debt for equity swap in which all of the company’s equity is transferred to the lenders and existing shareholders are wiped out. Under such circumstances, it can be exceedingly difficult for trade creditors to maximize value and ensure that they have a seat at the table during the bankruptcy process. There are, however, some important steps that trade creditors can take to enhance recoveries. While the value inherent in maintaining the debtor as a future customer through the continuation of the enterprise as a going concern is always a consideration, trade creditors also have
July/August 2012
several tools at their disposal to generate a return on their prepetition claims. Creditors can use motion practice and the debtor’s continuing need for product on a postpetition basis to ensure the maximum and timely payment on account of claims arising under Section 503(b) (9) for the value of goods received by the debtor in the 20 days preceding the commencement of the bankruptcy case. On its face, the Bankruptcy Code does not require that a debtor pay these claims immediately, and companies often delay satisfaction of these claims until the effective date of a plan of reorganization or sometime several months after the closing of a Section 363 asset sale. In order to avoid this result, creditors may seek to tie future extensions of credit to the Chapter 11 debtor or its successor-in-interest to the prompt payment of 503(b)(9) claims. Unsecured creditors are also increasingly turning to so-called “critical vendor” motions as a mechanism to obtain payment on some or all of their outstanding debts. Under these motions, a debtor petitions the court to allow it to satisfy the prepetition debts of specified vendors on the grounds that these vendors (i) are vital and irreplaceable to the debtor’s operations; and (ii) will cease providing merchandise to the debtor—and destroy the debtor’s going concern value in the process—unless and until they first receive payment of past due amounts. While critical vendor orders often require vendors to agree to ship product to the debtor on customary credit terms on a postpetition basis, such extensions of credit are entitled to administrative priority under the Bankruptcy Code and the risk of non-payment on these claims may be a small price to pay for full payment in what could otherwise be a zero return case. Unfortunately, in many cases the vast majority of trade creditors will not qualify for critical vendor status because the goods or services that they provide to a debtor are not sufficiently unique to warrant such treatment. Nevertheless, in recent years debtors have been more aggressive in seeking to obtain the authority to classify certain trade creditors as critical, and creditors have been equally as aggressive in seeking critical vendor status. ...continue on page 18
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NACM Oregon
Business Credit Journal
July/August 2012
BAPCPA - Part 3 continued from page 17 In light of where retail bankruptcies are likely headed in the next several years, it is clear that the definition of what constitutes “value” for unsecured creditors is changing. Full-pay plans are few and far between, and creditors must look to other new and creative forms of value, like those summarized above, in order to achieve a positive result in the case. For example, through the official Creditors’ Committee, creditors may seek to gain control over preference and fraudulent conveyance actions arising under Chapter 5 of the Bankruptcy Code in order to ensure that such causes of action are not pursued against trade creditors. In so doing, creditors can avoid incurring the costs and expenses associated with defending amounts received from the debtor in the 90 days prior to the bankruptcy from a clawback action. Moreover, by controlling how and when preference and fraudulent conveyance causes of action are investigated and pursued against non-trade creditors, including the debtor’s insiders and prepetition lenders, creditors committees may use the threat of litigation as a tool to gain the leverage necessary in the small window that will likely exist to increase returns under a plan. The steps outlined above can be used effectively by creditors to enhance value and maximize returns in retail bankruptcies. Nonetheless,
unless and until the Bankruptcy Code is amended further to ameliorate some of the negative, and perhaps unintended, consequences of BAPCPA, lenders, including the second lien lenders who now play a major role in the capital structures of retailers, will be unwilling to provide debtors with sufficient financing to effectuate a true reorganization process. In the interim, troubled retailers will be faced with an environment that renders a successful Chapter 11 reorganization virtually impossible, and trade creditors will need to maximize the effect of each and every tool at their disposal in
order to enhance value for their constituency. Lawrence C. Gottlieb is a partner in the Bankruptcy & Restructuring Group of Cooley, LLP. Brent Weisenberg and Michael Klein are each associates in the Bankruptcy & Restructuring Group at Cooley.
© New Yorker Cartoon. 2006 Robert Mankoff from cartoonbank.com. All Rights Reserved.
Page 18 7931 NE Halsey, Suite 200, Portland, Oregon 97213 Tel 503.257.0802 or 800.622.6985 • Fax 503.257.0247 • www.nacmoregon.org
NACM Oregon
July/August 2012
Business Credit Journal
Chairman John Hardy Emerson Hardwood Co. jhardy@emersonhardwood.com
Directors Steve Amiel Tektronix, Inc. steven.amiel@tektronix.com
Customer Service/ Credit Reporting 971.230.1220 services@nacmoregon.org
Industry Groups Richard Browning, CGA 971.230.1188 rbrowning@nacmoregon.org
Vice Chair Marsha Johnson, CCE TEC Equipment, Inc. mjohnson@tectrucks.com
Linda Bishop, CCE, CICP Tektronix, Inc. linda.j.bishop@tek.com
Data Contribution Shannon Abnal, CGA 971.230.1166 sabnal@nacmoregon.org
Kristen McBride, CGA 971.230.1176 kmcbride@nacmoregon.org
Secretary/Treasurer Pat Swope, CCE, CICP Pacific Seafood Co., Inc. pswope@pacseafood.com Counselor Raeann Binau, CICP, RGCP Airgas - Norpac, Inc. raeann.binau@airgas.com
Will Campbell Standard Supply Co. willc@standardsupplyco.com Tony Ceniga Industrial Finishes & Systems t.ceniga@industrialfinishes.com
Member Services Kathy Linscott, CGA 971.230.1164 klinscott@nacmoregon
Paula Cooley, CBA American Steel pcooley@american-steel.com
Member Services Account Executives Clara Nemeth, CGA 971.230.1144 cnemeth@nacmoregon.org
Sue Hein Rapid Bind, Inc. sue@rapidbind.com
Denise Redding, CGA 971.230.1178 dredding@nacmoregon.org
Lori Jones, CCE ljdangermouse@gmail.com
National Account Executive Caroline Anderson, CGA 971.230.1168 canderson@nacmoregon.org
Kimi Shelton-Muller, CCE EKC Consulting, LLC kimimuller@comcast.net President Rod Wheeland, CCE, CAE NACM Oregon rwheeland@nacmoregon.org
Collection Services Brenda Terreault, JD, CBA 971.230.1196 bterreault@nacmoregon.org Billing Marmie Carpenter 971.230.1146 mcarpenter@nacmoregon.org Meeting Room Rental Elizabeth Heintz 971.230.1120 eheintz@nacmoregon.org Newsletter Editor Barbara Salazar 971.230.1182 bsalazar@nacmoregon.org
Education Elizabeth Heintz 971.230.1120 eheintz@nacmoregon.org
Page 19 7931 NE Halsey, Suite 200, Portland, Oregon 97213 Tel 503.257.0802 or 800.622.6985 • Fax 503.257.0247 • www.nacmoregon.org