Attorney wants us to stipulate to a plan where we will submit to judgment if we miss a payment.
This is a common request and alternative if you are liable for the debt - it eliminates legal and litigation costs and establishes a repayment plan.
Cash flow is VERY tight so we are at risk of missing any plan we agree to.
I don't know your cash flow situation but you shouldn't agree to a repayment plan unless you can make those payments. Otherwise they have a judgment they can immediately start executing upon - against your inventory, assets, accounts receivable, bank accounts, real estate, etc.
What are our alternatives?
Alternatives are to litigate the matter and win completely, OR win reducing the alleged amount owed, or file bankruptcy
The products/services they provided may have been defective or they breached the contract somehow.
Vendor is in midwest. How expensive will it be for them to chase this? Will we necessarily be responsible for their legal costs?
Not that expensive in reality - $5K maybe? They only have to show:
1) that they supplied you with products and services at a certain cost and payments were to be made pursuant to the invoice or agreement
2) that you defaulted and didn't make those payments
3) show their damages or amount owed
Your defense is that the product or services were somehow defective or that the contract provided for a payment plan or something.
You would only be liable for their legal fees IF the contract provides for the recovery of legal fees to the prevailing party and if they have to pursue the matter. Most contracts provide for such (the recovery of attorney's fees and litigation costs but I don't know what your contract provides).
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