Category Archives: Legal Aspects of Credit Management

Selling To Native American Tribes

Posted by on February 3, 2014 at 10:01 pm.

by April Tanner, Kimball Equipment Company

Does your company sell to foreign nations? Your company may be taking this risk and not even know it. If you sell to a Native American Tribe –  with or without your knowledge of the tribal ownership of the company, then your company is selling to a Sovereign Nation and the normal credit rules don’t apply. The risk – yes risk – your company is exposed to is increased. . . unless you are prepared.

United States Indians, Canadian Indians and Alaska Natives are considered Native American Tribes by United States and Canadian law. In the United States, the tribes have their own laws.  These laws apply to their land, property, members and legal justice system. The Bureau of Indian Affairs in 2010 recognized over 300 tribes in the United States alone. Tribes ARE NOT normally subject to most United States laws. This fact will impact your business. These impacts will include your company’s ability to collect debt owed, repossess rented equipment, the safety of employees doing repairs to tribal owned equipment on tribal land, your company vehicles, and your employees/salespersons who enter tribal lands etc. 

Selling to tribes may also have an impact on your company’s relationship with your bank. Many banking rules and loan covenants have specific guidelines about reporting sales to tribes because of the high risk. Your company’s insurance policies also may have specific guidelines or regulations about selling to or having company employees or property enter Sovereign Nations Territory. Even our yearly auditors ask about our sales to tribes and how we control risk.

In the past 10 years I have noticed a huge increase in the number of tribes starting up companies and entering the business world. In some cases the tribe has leased their land to private US companies for use – further complicating legal issues. Many tribes are trying to utilize the assets they own in new and better ways to benefit the tribe . . . read full article

Letters of Credit v. Security Deposits

Posted by on November 5, 2013 at 11:29 pm.

By Dana Farmer. Smith Knowles, PC

Some creditors find that maintaining security deposits for marginal customers is a convenient method to protect against default. However, security deposits are still considered to be the property of your customer and if the customer files bankruptcy the bankruptcy trustee has the authority to take the security deposit. Therefore, as an alternative to the security deposit, you can use a letter of credit. If your customer has enough money to give you to hold as a security deposit, then they could also deposit that money with the bank in exchange for a letter of credit.

Once the bank has the money, it can issue a letter of credit which you would be able to use to apply to any deficit. Since the money is then deposited with the bank, the bank bears the risk of losing the money to a bankruptcy trustee. Yet, since the letter of credit is between you and the bank, your customer’s bankruptcy . . . read full article

Protecting Lien Rights and the SCR (Utah State Construction Registry)

Posted by on March 19, 2012 at 2:39 pm.

By DeAnna Leahy, CCE, Sunroc Corporation

Information for Subcontractors and Suppliers: The State Construction Registry (SCR) allows subcontractors and suppliers to protect lien rights.

By filing a preliminary notice through the SCR system, subcontractors and suppliers alert property owners, banks, title companies and general contractors to their involvement in a project and expectation of payment.

This helps those with the money to oversee that payments navigate down to the appropriate parties, especially when there are multiple levels of subcontractors.

The SCR system also helps keep subcontractors and suppliers informed by providing automated email notifications when additional Preliminary Notices or Notices of Completion are filed on any of their projects. Automated notification of the Notice of Completion is important because it notifies subcontractors and suppliers that they have 90 days or less to file a lien if they haven’t been paid.

Key Filings for Subcontractors and Suppliers: Preliminary Notice: Anyone working on a construction job or providing materials for a job has 20 days after they started working on the job to file a Preliminary Notice. However, the 20 day rule changes at the end of the job. If a Notice of Completion is filed for that job, all remaining Preliminary Notices must be filed within 10 day after the Completion is filed.

Remaining to Complete: On a small number of jobs, an Intent to Complete is filed by the Contractor. After an Intent to Complete is filed, anyone who has filed a preliminary notice must file a Remaining to Complete statement within 20 days. This filing informs everyone if the subcontractor or supplier has not been paid yet.

Filing Tips for Preliminary Notices: View full article