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Export Development Canada - Weekly Commentary
What are basic concepts of Personal Property Security in Canada?
BANKRUPTCY FRAUD WARNING SIGNS - A CHECKLIST
Use the following list to identify signs of bankruptcy fraud.
- Failure to keep commonly used business records; incomplete or missing business records
- Unusual depletion of assets shortly before bankruptcy filing
- Assets are concealed
Deception of the Gift and Prepaid Credit Card
What do you do about those not so great gifts, those gifts you didn’t get and really wanted? If you’re lucky you can return the gifts you don’t want and purchase what you really want! Or you may have received gift cards to buy whatever you want but it may not be from a retailer that you shop at.
Gift cards and pre-paid credit cards (credit cards with amounts already on them) have become more and more the option for giving, it’s simple and easy. The popularity of gift cards has created a new portal for fraudsters to deceive you and relieve you of your hard earned money.
Collecting from your large customers: Is it 'Collections' or 'Corrections'?
A few years ago I was at a major railroad company for imparting training sessions on the topic of Collection Skills and Receivable Management. On the first day of training a, I realized that the collections staff was made up of people who had a significant number of years of collections experience. The group was an enthusiastic batch; however most of the proven collections techniques were being met with...
Predictive Indicators - Learn how to read the signs and improve your bottom line
Managing your company’s exposure to risk has become a challenging task. There is more pressure to speed up the credit review process and more responsibility resting on your shoulders to be accountable for your decisions and improve company profitability.
Court Declines to Approve Sale of Assets as Part of Proposal Proceedings
In the decision of Justice Cumming In the Matter of the Proposal of Hypnotic Clubs Inc. (“Hypnotic” or the “Debtor”) the court dismissed a motion by the Debtor for a sale of its assets pursuant to s.65.13 of the Bankruptcy and Insolvency Act (“BIA”).
Demand Promissory Notes and the (New) Ontario Limitations Act
Hare v. Hare (218 O.A.C. 164), a December 2006 decision of the Ontario Court of Appeal, has important ramifications for the use of demand promissory notes in tax planning. Legal and tax planners should be aware that standard drafting language used in promissory notes may bring about unintended consequences.
International Financial Reporting Standards
Effective January 1, 2011, IFRS will replace current Canadian GAAP accounting standards for Canadian publicly accountable enterprises (PAE) and Government Business Enterprises. As of this date as well, private companies have the option of adopting IFRS or the new Canadian standards developed specifically to meet their users' needs which are referred to as the Accounting Standards for Private Enterprises.
Role of the Credit and Collections Department in Business
Companies expect their credit department to be sales oriented. Put simply, this means the credit department should be looking for reasons to justify establishing open account terms and/or releasing orders pending, rather than looking for excuses to hold orders or to reject applicants for open account terms. Having this simple idea in mind can make
BIA compared to the CCAA
The Companies' Creditors Arrangement Act (CCAA) is a federal law allowing insolvent corporations that owe their creditors in excess of $5 million to restructure their business and financial affairs. Under the CCAA, corporations ask the Court for protection while they prepare ...
Search Sites for Bankruptcies in Canada and the US
In Canada, you can check on the Superintendent of Bankruptcy search site, or in the US, by looking for a filing on PACER, (Public Access Court Electronic Records.) You will have to establish an account on PACER, but the fees are ...
- current Ratio
- Acid Test
Debit - Equity Ratios
- Current Debt to Tangible Net Worth
- Total Debt to Tangible Net Worth
- Working Capital
- Net Worth
PPSA Registrations - Is this the Weakness in Your Armour?
As the saying goes, an ounce of prevention is worth a pound of cure. This expression is particularly apt when it comes to secured creditors and their registrations under the Ontario Personal Property Security Act (the "PPSA"). Although "getting it right the first time" has always been the mantra of secured creditors, the economic roller coaster ride of recent months has heightened the need to ensure a properly perfected secured claim.
What are the 6 key steps in firming up a collection call?
If a customer must pay back a debt over time, what are the 6 critical elements in negotiating payment plan?
What are the 4 C's of Credit Granting?
Character - the desire to pay when debts are due, Capacity - the financial ability to pay debts when due, Capital - the logn-term financial strength to pay, Conditions - factors that affect the debtor, over which they have little or no control
What are the stages in an effective collection program?
Why are monitoring and control procedures critical to reduce bad debts and overdue accounts?
Small Claims Court - Ontario
Credit and Collections Department Should Be Generating Revenue
Next time you are spending quality time with a client, at a board meeting, or getting an update from the CFO you may want to inquire about practices of their company's credit and collections department. The credit and collections department is constantly interacting with the company's customer base. This provides them with opportunities to augment sales, identify customer...
We've listed some of the warning signs of fraud below. The most important is the country of origin.
- Orders originating from or containing shipping or billing addresses in some countries, particularly Romania, Macedonia, and Belarus, have an extremely high incidence of fraud.
Larryâ€™s Recipe for Success â€“ Top 30 Ingredients
https://creditedu.org/knowledgecentre/index.php/site/page/134Larry Pollock, the past president of the Canadian Western Bank offered these tips for success in his recent address to the delegates at the 2013 national credit conference in Jasper. Larry should know. He is Canadaâ€™s longest serving bank CEO, having led the Canadian Western Bank from 1990 to 2013.
Acceleration Clauses in the Event of Default â€“ Are they enforceable?
All leases have an acceleration clause when there is a default, however there is not a consistent approach as to what the damages will be. Some leases require the defaulted lessee to pay the balance of payments due without discount while others utilize a net present value formula applying a discount rate close to, but generally below, the interest rate implied in the lease. A few still use “the rule of 78’s” (but few under 50 know what that means). The recent case, Hav-A-Kar Leasing Ltd. v. Vekselshtein 2012 ONCA 826 (“Hav-A-Kar”) discussed this matter but may have not quite got it right.
Sharpen Your Financial Analysis Skills
https://creditedu.org/knowledgecentre/index.php/site/video/143Presented by George Brown, MBA, CMA, CCP, CIA
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Target Take Two
http://www.creditedu.org/files/pdf/webinarsTarget_Canada_Keynote_Russell_Bennett_13Oct15.pdfBack by popular demand, Russell Bennett will revisit the bankruptcy of Target and the fall out for its creditors. In May, when we first held this Live-Webinar, it generated a lot of interest from our members â€“ follow up questions continue to come in to the National office.
Betting The Company: BOMBARDIER Goes All-In on C Series Jets and Blows Up Its Balance Sheet
https://creditedu.org/knowledgecentre/index.php/site/video/170A brief analysis of Bombardier's woes and what we can learn from a company undertaking a massive project, consuming working capital, and ultimately destroying its balance sheet.
Insights for the Target Debtor Community
https://creditedu.org/knowledgecentre/index.php/site/tool/172Our webinar on the Target Bankruptcy would be of great interest to companies who felt the financial pinch from Targets shutdown in Canada. Webinar participants found it very insightful.
Excel Essentials for Credit Professionals - Part 1
https://creditedu.org/knowledgecentre/index.php/site/video/177If youâ€™re looking for ways to increase your productivity and get more things done in a work day, this webinar on Excel ESSENTIALS is for you! During the 1 Â½ hour session, attendees will learn about spreadsheet basics through live step-by-step demonstration and using simple exercises that credit professionals can relate to.
Excel Essentials for Credit Professionals - Part 2
https://creditedu.org/knowledgecentre/index.php/site/video/178Each topic in our Excel Essentials for Credit Professionals Series is designed to help you solve a range of problems utilizing a class of functions and/or tools that are often overlooked. In this one-hour webinar our returning guest speaker, Nick Kenyeres, will cover Excelâ€™s lookup functions (vlookup & hlookup) and conditional formatting. Stay ahead of the curve by joining us to learn how you can benefit by adding one more Excel essential skill to your personal arsenal.
If A Customer Must Pay Back A Debt Over Time, What Are The 6 Critical Elements In Negotiating Payment Plan?
https://creditedu.org/knowledgecentre/index.php/site/tool/183Please enjoy this complimentary video from our Best Practices Series
If A Customer Must Pay Back A Debt Over Time, What Are The 6 Critical Elements In Negotiating Payment Plan?
https://creditedu.org/knowledgecentre/index.php/site/page/184Please enjoy this complimentary video from our Best Practices Series.
Lien Provisions of the Ontario Construction Lien Act
https://creditedu.org/knowledgecentre/index.php/site/video/189Presenter: Pallett Valo LLP
The warning signs that preceded Carillion's fall
Not since the financial crisis has the collapse of a business had such a political impact, but the warning signs had been flashing at Carillion for all to see, says Jane Fuller.
Cedar Creek Deal, Other Costs Push BlueLinx Into the Red
Fresh off of its acquisition of Cedar Creek, BlueLinx reported today a first-quarter net loss of $13.4 million, swinging from a $600,000 profit in the year-earlier period. Sales rose 2.1% to $437.5 million. Gross profit totaled $55.3 million, a 1.6% gain, the Atlanta-based distributor said. Gross margin was essentially unchanged at 12.6% of revenues.
Dorel take US$12.5 million Q1 impairment charge due to Toy â€˜Râ€™ Us liquidation
https://creditedu.org/knowledgecentre/index.php/site/page/224In addition, the company says its profitability was hurt by a shift from its stores to online purchases in Chile, production challenges at a Chinese factory, high raw material prices, restructuring costs at its sports division and investments in technology in home furnishings.
PetSmart taps advisers to trim $8 billion debt pile: sources
https://www.reuters.com/article/us-petsmart-debtrestructuring/petsmart-taps-advisers-to-trim-8-billion-debt-pile-sources-idUSKCN1J21YD(Reuters) - PetSmart Inc, the largest U.S. pet retailer, has hired restructuring advisers to explore ways to trim its debt pile of more than $8 billion as it continues to face falling profits, according to people familiar with the matter.
Do Not Miss the Warning Signs of Insolvency!
Q and A (2)
What can creditors do to protect themselves when a customer remits a cheque, for less than the full amount owing, and marks it "Paid in Full" or words to that effect? Also, what can a creditor do to protect themselves in this situation when their company uses a "lock box" or "shared service" center and the A/R personnel may not even see the cheque prior to it being negotiated? Is the law that governs these scenarios Federal or Provincial?
Courts are very familiar with this tactic and will generally not give effect to it. A cheque marked “paid in full” may very well be evidence of an agreement to reduce the debt owing, but it is easily rebuttable by clear evidence that the creditor accepted the payment only as partial payment. This is based at least partially on the concept of consideration. Put simply, this concept involves the idea that you do not get something for nothing. What the debtor is attempting to do in this situation is to receive a discount on its debt without providing any real benefit to the creditor in return. The courts will not allow a debtor to unilaterally alter its agreement with its creditor - which is what it is attempting to do with the notation on the cheque.
One possible method of dealing with such attempts would be regularly forwarding statements thanking the debtors for any payments received and indicating the account balance to date. If the debtor then challenges the statement arguing that payment had been made in full by way of the cheque in question, all the creditor would have to do would be to respond by saying it was received in partial payment. Unless the debtor is able to produce some sort of an agreement with the creditor showing the creditor’s agreement to accept the reduced amount in full satisfaction for the amount owing, it is extremely unlikely that the courts find in favour of the debtor.
Of course, if the creditor notices the notation before it deposits the cheque, it can also send a specific letter to the debtor thanking it for the payment and saying that the payment has been applied against the amount owing, that the creditor did not agree to accept the payment in full satisfaction of the amount owing and that the balance remains owing by the debtor.
The law governing these scenarios is the common law of contract, which is a matter within the jurisdiction of the provinces. As such, the law as interpreted in one province may not necessarily be applied in another. However, frequently the courts in one province will consider and often follow the decisions of courts in other provinces.
We see more and more public companies partially or completely reorganizing as Income Trusts. What are the advantages and disadvantages to the company and what could the ramifications be to trade creditors? Is there anything we should be questioning or looking for in this type of transaction?
An income trust (the "Trust") is essentially an investment vehicle which a corporation (the "Corporation") can establish in order to divert and distribute its revenues in a generally more tax efficient manner to the investors of the Trust.
While the pros and cons of establishing an income trust are largely tax driven, extremely complex and beyond the scope of this forum, income trusts basically operate by taking the monies raised by the Trust from its investors and loaning them to the Corporation. Such loan can either be on a secured or an unsecured basis. Revenues from the Corporation's operations are then paid to the Trust in order to service the loan with those monies then being available for distribution to the Trust's investors.
The typical structure sees virtually all of the Corporation's distributable income paid out without corporate tax because the income is being used to service the Corporation's debt (e.g., the loan from the Trust). If the investors of the Trust are tax-exempt entities such as RRSPs or pension funds, payments to them from the Trust will be received on a more favourable tax basis than if the monies were distributed as dividends.
While the establishment of the Trust will not alter the manner in which the Corporation carries on its business (note that the Trust does not carry on business - it is simply an investment vehicle), the difference is that with the establishment of the Trust, the Corporation has a new and typically large creditor (being the Trust) whose debt must be serviced by the Corporation.
From the perspective of companies doing business with the Corporation and extending credit to the Corporation, while the creation of the Trust in and of itself will not negatively impact upon the Corporation's ability to carry on its business, companies doing business with the Corporation may be at a greater risk should the Corporation subsequently run into financial difficulties. Aside from the Corporation having less flexibility to refinance since cash flow will be committed to debt service on the monies owing to the Trust (and other lenders), the Trust represents a new creditor which did not previously exist. If the Trust's loan to the Corporation is made on a secured basis, the Trust will be entitled to recover its monies prior to all of the Corporation's unsecured creditors, thereby diminishing the pool of funds available to the unsecured creditors. Similarly, secured creditors are at risk to the extent that the Trust's security has priority over their security. If the Trust's loan to the Corporation is made on an unsecured basis, the Trust will be another unsecured creditor sharing in the monies available to the unsecured creditors, meaning less monies will be available for the unsecured creditors had the Trust not been created.