CIS DRS

CASE: COMMERCIAL CREDIT COLLECTION FOR TUBES MANUFACTURER

Creditor:

The worldwide supplier of shoes and is one of the leading sellers in China
Debtor:

International chain with many brands
Case type:

B2B case
Our client is ranked as the world’s fifth in the complete production process of iron-making, steel-making, tube rolling and further processing. According to reporting and public information it has the annual capacity to produce 1.1 million tons of iron, 1.7 million tons of steel, and 1.5 million tons of tubes and other products. All in all, it is one of the seamless steel tube & pipe enterprises with a network of manufacturing plants, a large number of advanced plant types, and complete product size ranges.

Obviously such activities are supported by many shipment agreements of exported products. In many cases such shipments are guaranteed by the governments, insurance companies, export credit agencies or other guarantors. Unfortunately not every and each customer (importer) follows the agreed terms of payment.

In the case below the Debtor’s company is one of the largest energy companies in the world. Its operations cover areas such as natural gas exploration, production, transportation and processing. Parties have signed a contract for a number of tubes. Having a contract in Asia brings some specifics into further collection processes. The parties have added the clause that established the obligation of a state-owned company in a country of the debtor to cover the outstanding amount instead of the debtor in case of delay. Since the contract was bilateral, this made the above clause invalid.

As usual our team of lawyers carefully studied the available documents, governing law and chances to claim the recovery. Communication strategies and the workflow was developed. Additional search was made to find necessary information regarding the CFO of the Debtor company and to establish a contact with him. The Debtor informed us that his company did not receive the expected funding and was not able to pay. They expected to receive state funding to cover the contract. However the payment did not come.

Moreover, the CFO reminded us about the obligation of the state-owned company in another country to cover the payment. Our team has been involved in negotiations with the representatives of the mentioned governmental company. However, their position was to categorically refuse to make any payments instead of the Debtor. Of course, all necessary communication and replies were duly documented and forwarded to the government of the debtors’ country. All relevant ministries and departments received the requests. As it was expected, they refused to push the company to pay the debt due to specifics of traditions in the debtors country.

Meanwhile our lawyers did their best to continue pushing the debtor to pay the debt or to give a schedule for the debt repayment. Successful tactics and pressure has led to the written obligation to cover the debt. The debtor company started to pay money according to the confirmed schedule. Lawyers finally supported the payment process. Creditor has received the necessary financial resources for further business activity.
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