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Category: Business Law
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Good Morning- I have a retail customer that I sell on a regular

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Good Morning- I have a retail customer that I sell on a regular basis. However, they are chronically late and recently had an ownsership change. I am concerned that this might put our receivable in jeopardy. Add the current economic conditions it is very concerning. The commodity we sell is cigarettes (cartons) and they owe us $500,000.00. Can I go into court and get a lein on their inventory to protect the exposure we have to them?

Please advise.

Thank You.

Howard Schapiro
Submitted: 7 years ago.
Category: Business Law
Expert:  INFOLAWYER replied 7 years ago.
Your recourse is to to invoice them assuming you have not done so. Then you would need to sue, preferably using a collections lawyer on contingency fee basis and secure a judgment. Once you have a judgment you can pursue assets, bank accounts, and similar enforcement.
Customer: replied 7 years ago.

Can our Attorney get the the judgement without a full-blown court hearing with both sides in attendance? If they know what we are considering there is a good chance they will empty the stores before any court hearing effectively making our move mute!

Expert:  INFOLAWYER replied 7 years ago.
They may agree to a judgment or agree to settlement where in the event of default you would be entitled to judgment. Alternatively then lawyer can sue and then move for expedited decision by summary judgment motion.   Your lawyer could also commence a lawsuit by expedited basis and see an a TRO and injunction against disposal of assets until case decided.     
Customer: replied 7 years ago.
I am trying to understand the following: Can we get a judgement and/or lien using the "surprise factor". If they are aware that we are considering any of the suggestions you have made thus far, they will be able to take action before we are able to be protected. It would be extremely easy to empty the stores of the cigarette cartons leaving just enough to make it look good. We would be crazy to let them know we are considering action because they will surely run with the inventory leaving us to chase a $500,000 debt without much if any remedy. There must be a way to get a lien that protects us and that is in force before they know that we are concerned and are contemplating action. Otherwise, any debtor can pay when they want and disappear if they smell any potential action against them. Remember, they are already laste on the major part of the debt. Although illegal, it would be very easy to run a few loads North and sell them for cash. We would be out the recevable, the potential lien on the "now sold and missing" inventory, and left with nothing but paper. The current management are not beyond doing any of what I have outlined. We would never have extended credit to the current ownership group. They have already requested a $100,000 rebate saying that they paid too much for the previous purchases. Nobody put a gun to their heads to purchase the inventory from us. It must be understood that today, with taxes and prices what they are for cigarettes, they are like cash. We will never see a dime without using the surprise tactic. There must be a way to protect ourselves (surprise) or we are btter off saying nothing and hoping for the best!!!
Expert:  INFOLAWYER replied 7 years ago.
By suing in an expedited basis and seeking a temporary restraining order you can get a court order barring them from disposing of their assets. You need to show likelihood of sucess of the merits and irreparable harm in letting the case proceed by normal course. This is a more expensive process in the short term as far as legal fees.   Kindly accept my answer.
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