Company A sells product to Company B who uses the product to manufacture and sells to company C.
Company A has a UCC Financial statement over all inventory, receivables and cash.
Company A provided faulty product (300 Door Slabs) that company B manufactured and sold to company C. After company C installed the finished product, the product started to delaminate. Company A acknowledged the error and agreed to replaced all 300 door stabs to be re-manufactured by company B and except all back charges by company C.
This situation caused company C to pull all open purchase orders from company B ($50K) and short paid the open balance by $11K for backcharges to re-install the 300 defected door slabs.
This forced company B to go out of business
and liquidate the company.
The issue is, company B has an outstanding balance of $12K with company A who has decided not to accept the $11K backcharge as promised. Company B shows only owing company A $1K. Due to the UCC filing, they are looking to enforce it.
How does one go about disputing the amount owed and closing the UCC filing. (They have agreed to reduce the balance to $6K but that is still not the correct amount.