Commercial Bankruptcies Hit 2010 Level

Commercial bankruptcies have skyrocketed since the historical lows during the height of the pandemic. At 236 corporate bankruptcy filings so far this year, the number is higher than the first four months of any year since 2010 and more than double 2022 levels, according to S&P Global Market Intelligence. They forecast that the U.S. default rate...
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Refine the Lien Waiver Process

Over the past decade, lien waivers have evolved from a half-page, fill-in-the-blank form, to a lengthy legal document. But now, creditors have more trouble tracking what's been waived per project and some lien waivers are misleading and demand concessions. This, along with changes in statutory state laws, makes it all the more important that credit...
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What Type of Lien Is Best for Your Business?

The mechanic's lien laws we know today provide a legal claim on homes and other property filed by an unpaid contractor or material supplier. Liens are used primarily to collateralize a debt that is owed. Many different liens exist today, including tax liens, mortgage liens, UCC liens and mechanic's liens, just to name a few. Trade creditors are oft...
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Understanding Article 9 Restructuring

Under the Uniform Commercial Code (UCC), debtors have a variety of options to overcome insolvency. For example, an Article 9 reorganization is an out of court restructuring that sells the assets of the debtor company to a third party with the proceeds for the benefit the secured lender. Any residual balance of the secured debt remains with the debt...
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Material Shortages Threaten Completion of Infrastructure Projects

Manufacturers continue to struggle with completing projects on time due to the tightening of supplies such as cement—the second-most widely used material in the world after water. The aftermath of supply chain issues has caused inflation and shortages in not only retail-focused industries, but machinery and non-residential construction as well.Shor...
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Beware of These 10 Trigger Words in Construction Contracts

Trigger words are terms and phrases in construction contracts that heighten risk during a B2B transaction. Credit professionals must pay close attention to these trigger words to avoid additional costs, payment delays or nonpayment on a project.#1 Mandatory Arbitration ClauseLitigation is a lengthy process that often delays payment, which is how ma...
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Legislative Roundup: What Will Impact Trade Credit?

California Senate Bill No. 1235 (SB 1235) Does Not Directly Impact Trade CreditThe California Department of Business Oversight recently released regulations pertaining to the content and enforcement of SB 1235, which amends California's Financing Law (CFL) and sets forth disclosure requirements for "Commercial Financing Transactions."SB 1235 was co...
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Can Federal Funds Be Used for State Construction Projects?

Government construction contracts can provide an opportunity for contractors to gain a great deal of profit—but contractors must be able to distinguish the placement of federal money in both federal and state projects.In the state of California, most federal funds come through FEMA to help repair roads, bridges and more. Most federally funded proje...
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Can the Credit Profession Be Remote?

Hybrid and remote work schedules became widely used at the start of pandemic as companies adapted to social distancing. Three years later, many credit teams remain on a hybrid schedule while some have returned to a traditional in-office model. In a recent eNews poll, nearly half (47%) of credit professionals said every person on their team works re...
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Severe Weather Creates More Credit Risk Every Year

Severe weather and climate change events add an additional layer of risk for credit professionals, and these events are becoming increasingly more common. Everything from hurricanes to droughts, snow storms and wildfires, the weather is contributing to rising prices and payment delays. In order to prevent future losses, credit professionals must be...
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Make It a Priority to Protect Your Mechanic’s Lien and Bond Rights

Mechanic's liens are one of the strongest tools that construction credit professionals can use to mitigate the risk of nonpayment. But filing a mechanic's lien correctly and on time can be a challenge as each state has its own laws governing the steps it takes to file the lien—and those laws can change quickly.Failing to properly file a mechanic's ...
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Recession to Start Later than Expected, CMI shows

NACM's Credit Managers' Index (CMI) improved for the first time since October with a 1.1-point jump from 51.3 to 52.4. While this is a sign that a recession will likely happen later than originally forecasted, many credit professionals remain cautious, said NACM Economist Amy Crews Cutts, Ph.D., CBE.She now expects the U.S. to enter a recession bet...
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General Contractors Should Beware of Subordination Agreements

Lien waivers are critical in construction payments, and general contractors are typically required to subordinate their mechanic's lien rights to lenders. Mechanic's liens can have a negative impact on cash flow and in some cases can force double payments. With the current economic climate, construction projects have faced more hardships and compan...
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Chapter 11 Bankruptcies Are Up 70% Annually

Bankruptcy courts are getting busy as more large companies have filed for bankruptcy last month than in any January since 2010, according to Bloomberg. Bankruptcy filings were up year-over-year across Chapters 7, 11, 13, and 15 in January 2023, according to data from Epiq Bankruptcy. Total commercial filings increased 12% year-over-year, Subchapter...
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Missouri Court Case Highlights Fraud Risk in DBE Programs

Disadvantaged Business Enterprise (DBE) programs are intended to aid small businesses owned by minorities, women or service-disabled veterans. However, these programs can create holes for fraudsters to take advantage. Under the False Claims Act (FCA), whistleblowers or "relators" are provided incentives to bring complaints or lawsuits against any e...
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The Importance of Job Information Sheets for Infrastructure Projects

Infrastructure projects can be complex for a number of reasons; among them are the absence of a physical address of where the job will take place, funds from Public-private partnerships (P3) and overall higher chance for something to go awry.Scope of WorkRoads and bridges are in built in open spaces with no exact road or street name to locate them....
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Late Payments Are Rising: Should You Follow-Up Sooner?

Credit professionals have reported an increase in delinquent accounts in recent months as customers continue navigating the economic storm. 39% of credit managers say inability to pay is the primary reason for past-due accounts, according to a recent eNews poll—and the dollar amount beyond terms factor in NACM's Credit Managers' Index fell 7.7 poin...
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Virginia Ban on Pay-if-Paid Clauses Now in Effect

Virginia joined the growing list of states to ban pay-if-paid clauses in construction contracts as part of a new law known as Virginia Senate Bill 550 that amends the State's Prompt Payment Act. The ban, effective for contracts signed after Jan. 1, 2023, shifts the risk of owner nonpayment back to the contractor. Pay-if-paid language is expressly p...
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Creditors Beware of Subchapter V Filings

At some point in nearly every trade creditor's career, they will be faced with a customer who files for bankruptcy. The steps taken to collect cash from a customer during bankruptcy will depend on how the customer files. Subchapter V is a newer modification of Chapter 11 for small businesses, but it places a larger burden on creditors to collect de...
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Construction Material Prices Up 40% Since February 2020

Construction input prices declined 0.9% in November compared to the previous month, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics Producer Price Index data. Nonresidential construction input prices fell 0.8% for the month.Construction input prices are up 11.9% from a year ago, while nonresidential c...
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