The ABCs of legal issues encountered by credit professionals.(LEGAL)

NACM's 111th Annual Credit Congress & Exposition, to be held at Bally's Las Vegas on June 10-13, 2007, will be here before you know it. The legal sessions that will be held at the Congress are always near and dear to this writer's heart.

I have frequently remarked at lectures and in articles about the extent to which credit professionals are exposed to legal issues as part of their daily duties. It would certainly not be an overstatement that a company's credit department has more exposure to legal matters than most other departments, possibly with the exception of the legal department. Some credit professionals have even commented that their legal department will often approach them with questions on bankruptcy and certain other legal issues.

When NACM asked me to write an article about the legal issues confronting credit professionals, I put pen to paper and catalogued and provided brief descriptions of legal subjects from "A to Z". And believe me folks, this just scratches the surface of legal matters credit professionals must contend with. So, in the words of the "Great One," Jackie Gleason, "AND AWAY WE GO!!!"

A.

"Accord and Satisfaction" is where the debtor seeks to discharge a disputed or un-liquidated obligation by delivering a check "in full settlement," "in full satisfaction" or "in full payment" or similar verbiage of the debtor's obligations to the creditor. A creditor could try to avoid an accord of satisfaction by including, with their endorsement of a full payment check, such language as "under protest" "without prejudice" and/or "with full reservation of rights." However, the courts have reached conflicting decisions on the sufficiency of such language to avoid an accord and satisfaction.

"Antitrust" is federal and state law intended to enhance competition. The federal statutory framework consists of, among other statutes, the Sherman Antitrust Act of 1890, the Clayton Act of 1914, as amended by the Robison-Patman Act of 1936, and the Federal Trade Commission Act of 1914. Antitrust law precludes any contracts, combinations, conspiracies or other activity "in restraint of trade" or resulting in "price discrimination." Antitrust law could be implicated in fixing or changing credit terms and in the exchange of credit information with other creditors, and/or with members of a trade group. Any violation of applicable antitrust law could result in civil and, in some instances, criminal liability.

"Assignment for the Benefit of Creditors" is a state law liquidation proceeding. The debtor assigns all of its rights to its assets to a third-party assignee. The assignee holds all of the debtor's assets in trust for distribution to creditors based upon the priority of their claims as determined by state law.