What Your Attorney Needs to Know to Collect Your Company’s Business Debt.

 

The coronavirus has blown a hole in your company’s budget, creating a cash-flow shortfall that may last for years to come.  You are looking at unpaid receivables and wondering when or if you will be paid.  With help from your attorney, you can collect these unpaid bills. 

 

Luck favors the prepared.  Your attorney is going to need documents and information to get started on your business collection case.  Here are some suggestions on how to organize the material you should provide to your lawyer:

 

Contracts.  The foundation document is usually a written contract or agreement between the parties, with one or more attachments.  Often the agreement has been modified or amended.  For larger projects, there may be both a master agreement and a subcontract.  Also, there may be a statement of work or letter agreement.  Sometimes there is a promissory note, warranty or guaranty.  It’s critical to gather signed copies of these documents and provide them to your counsel.

 

Demands and Responses.   Commercial disputes do not arise out of thin air.  There is usually an ongoing dialogue and written communications—emails, texts and letters—documenting the breach of contract or business tort.  Many agreements require a formal notice of breach or notice of termination.  Often the other side will respond with a written letter explaining its position.  Your attorney needs these records.

 

Statement and Invoices.  The creditor needs to be able to prove that the debtor did not pay, or otherwise failed to honor a contractual obligation.  Your lawyer needs a written statement, showing credits and debits, along with the unpaid bills or invoices.  If any charges are disputed, the dispute needs to be explained. 

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Performance.  “Performance” of a contract means doing the act required under the agreement.  Examples of performance include shipping goods, furnishing services or paying money.  Performance must also be completed within the time required under the contract, or, if no time is specified, within a reasonable time.  If there is a disagreement about performance, your attorney needs documents and information supporting your claim.     

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Business Torts.  Your counsel needs to be informed about any false or misleading statements made in the formation of the contract or its performance.  In several cases, the firm has successfully sued corporate owners and officers for fraudulent statements, negligent misrepresentations and/or concealment of material facts.    

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Who Is the Decision Maker?  Your lawyer needs to know who makes decisions, so that pre-litigation communications are addressed to the correct person.  Also, it is important to inform your counsel about any point of leverage which might lead to a negotiated settlement.

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The Key Factors.  At all times, preparation and organization are the most important factors in both successful business litigation and commercial collection.  Help your lawyer make your case by supplying the documents and information necessary for you to win.

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Conclusion.  Do not let the economic shutdown collapse your company's budget.  Restarting and sustaining operations requires financial resources.  If your company is facing a revenue shortfall exceeding cash and credit reserves, you should act quickly to collect unpaid bills. 

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Nathan Wirtschafter, Esq. is a California business trial attorney.  His law practice encompasses a broad range of business matters, and he represents clients in state and federal courts, arbitration and mediation.  He can be reached at (818) 660-2518 and ndw@ndwlaw.com.

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