Normal Course Of Business Preference Defense:
Evaluating Industry Payment Patterns
Written by Lynne Richardson

When selling on terms to marginal accounts, the risk exists that the debtor will file in bankruptcy leaving the creditor in the position of not being paid for goods delivered and potentially facing a preference demand if the debtor was paying outside of terms. Not all preference demands are clear in their verbiage of "on account of antecedent debt" or "outside of normal course." What is normal for one creditor may not be normal for the industry. Adding to the complexity, the demands for preferences often require the creditor to go into their records and retrieve records, which in some cases do not match the records of the debtor.
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Security Interest Perfection Through a Chapter 11 Plan,
or “Forget About Article 9 of the UCC”
Written by David B. Wheeler

The debtor's chapter 11 plan calls for the preservation of a secured claim secured by a blanket lien through the plan, with distributions to general unsecured creditors to be secured by "a subordinated interest in all of [the debtor's] assets." Subsequent to confirmation and the default of the debtor under the plan, the prior security claimant's UCC-1 Financing Statement lapses. What happens to the relative priority of the secured parties?
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Former UTCC Co-chair Transitions Into New Role
Written by Douglas G. Fox

Lynnette R. Warman (Jenkens & Gilchrist P.C. Dallas) has stepped down as co-chair of the UTC Committee in conjunction with her election to the Board of Directors of the ABI. Ms. Warman had been a co-chair of the UTCC since 2001. Prior to becoming co-chair, Ms. Warman had served for many years as publications editor of News & Views.

During her tenure as co-chair of the UTCC, numerous accomplishments were achieved including the publications of (a) the Manual on Trade Creditors' Rights of Reclamation & Stoppage of Delivery of Goods, (b) the ABI Preference Handbook, and (c) the first electronic version of News & Views.

Also, in an effort to market membership in ABI to credit managers, the UTCC began hosting receptions at the NACM Legislative conferences held each year in Arlington, Va. In addition, there are a number of projects still pending, which the UTCC will continue to pursue.

On behalf of the UTCC, I would like to thank Lynnette for her many years of service and accomplishments while serving on the committee, and particularly her leadership while co-chair, and wish her “all the best” in her new endeavors.

In-house Counsel: A “Glass Ceiling” for Credit Managers?
Written by Douglas G. Fox

Many companies start their existence with the assistance of outside counsel—there is simply not enough legal work to justify the expense of hiring in-house counsel.

However, as the company grows over the years, it gets to a “critical mass” where the legal work is now well into six figures, and the decision is made to hire the company's first inside counsel.

Consider the following possible scenario.

Company A has grown rapidly by acquiring complementary product lines, each of which functions somewhat autonomously under its traditional name. However, visibility in the marketplace is a problem, and new executive management decides that a major image makeover is needed.
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Two New Co-Chairs for the UTCC

Deborah L. Thorne (Barnes & Thornburg; Chicago) and Berry D. Spears (Winstead, Sechrest & Minick P.C.; Austin and Houston, Texas) have been named by ABI President Bettina Whyte as additional Co-Chairs of the UTC Committee.

By way of introduction:

Co-Chair Deborah L. Thorne heads up the Creditors' Rights Department of the firm’s Chicago office. Ms. Thorne concentrates her practice in the areas of creditors’ rights, bankruptcy, financial restructurings, and commercial transactions. Ms. Thorne speaks frequently on creditor issues to NACM and similar professional organizations. When not practicing law, she runs marathons and is active with Women Employed, an organization that works to expand economic opportunity for low-income women.

Co-Chair Berry D. Spears is the leader of the firm’s Business Restructuring Practice Group, helping clients navigate all aspects of bankruptcy and insolvency, as well as non-bankruptcy reorganizations and liquidations. Mr. Spears has represented clients in numerous industries and commercial sectors, including financial institutions, manufacturers, retail, distribution, telecommunications, real estate, oil and gas, technology, as well as in the electric utility industry.

Co-Chair Douglas G. Fox (Bosch Rexroth Corporation; Bethlehem, Pa.) is Contracts Manager, Systems & Engineering. Mr. Fox brings to the committee more than 25 years of business credit management experience, with an emphasis upon unsecured credit, bankruptcy, contracts, mechanics’ liens, and surety bonds. Mr. Fox has received the Executive Award of the Graduate School of Credit and Financial Management, and he has been designated a Certified Credit Executive, NACM’s highest professional designation.

News & Views

There is a need for authors and contributors to assist the editor to help produce the E-newsletter several times a year. Interested participants are encouraged to contact David Wheeler as the committee is trying to expand its offerings.

Content for the newsletter is much less formal than for an article in the Journal. A case note on an interesting and cutting-edge decision, or a topic of interest involving issues related to the treatment of unsecured trade creditors, or a personal observation relevant to a case or issue, are all sources of topics that would be of interest to members of the committee. Rest assured, these topics need to be only a few informal paragraphs, since formatting and production is handled by the capable ABI staff.