Will Your Non-Paying Customer Give Up Possession of Goods Not Paid For?

Are you in possession of goods that belong to someone else? If so, you may want to consider making a deal with your non-paying customer that allows you to keep the goods so that you can resell them.

Goods and equipment have value, maybe more so now that the supply chain has been interrupted. By selling your delinquent customer’s goods you will be able to mitigate your damages and recover some or all of what is owed to you.

With our assistance, our moving and storage client successfully navigated a similar situation.

Our client was hired to pick up furniture and artwork from restaurants that were going out of business. The debtor bought 45 truckloads of furniture from now-defunct restaurants and hired our client to pick up, move, and store the goods. The client performed their portion and then the debtor stopped paying.

Our client, wanting to be paid the quarter of a million they were owed, realized the goods in storage had value. And, if the debtor was not paying, they might be able to sell the goods and artwork for far more than they were owed.

Our client and their non-paying customer agreed to a settlement and asked us to help structure a deal. As part of the deal, the debtor agreed that if settlement payments were not made, they would relinquish title to the goods, and our client would be free to dispose of the goods as they saw fit. The agreement provided for payment, title in the goods, and a pickup schedule. In the event pickup of the goods, after full settlement payment, was not made, the client was entitled to possession of any or all of the “abandoned” goods.

At this time, the debtor is currently making payments so no attempts have been made to liquidate the warehouse inventory.

Our manufacturing client in the cosmetic industry faced a similar situation.

Our client was hired to manufacture components and assemble the components with other parts supplied by the customer to produce lipstick cases. A scattered schedule was set for production and payment. Our client was paid for some production and assembly and shipped those goods according to schedule. When the debtor stopped making payments, the client ceased production, assembly, and shipment. Our client was in possession of the non-paying customer’s remaining components.

In this instance, the components had greater value to the non-paying customer than to our client. The debtor, though seriously delinquent on the $650,000 balance, needed the client’s assistance to continue producing the product so that debtor could realize a profit. The debtor required the client’s manufacturing and assembly services.

In this instance, where the goods and manufacturing process had greater value to the customer, we were able to structure a deal in which the debtor paid our client in installments. Once payments were made, our client released products from the past due balance. Any new manufacturing, assembly, and shipment were paid before the manufacturing process began. Our client was not only able to get paid on the past due amount but on future production contemplated by the parties.

Goods and services have value and can be an inherent part of any debt collection structure. For assistance, contact Frank, Frank, Goldstein and Nager. We have the experience that pays.