[RPPTL-constructionlaw] UCC Factoring Agreements and Subs Gone Out of Business

[lan at lwwhiteattorney.com]

You have to look at the factoring agreement.  When I went "in house" for a
time, one of my additional duties was to serve as President of our factoring
subsidiary.  Caveat - though I have "been there, done that" I am doing this
from memory.  Factors operate on one of two bases.  Either they loan against
the receivables, or they buy them.  If they buy them they may only buy the
receivables (most likely) or there may be an effort to assign the contract
(less likely).  Your first question is to decide whether it was a sale or
loan.  If a sale, in the unlikely event there was  an attempt to assign the
contract, consider the effect of an unlicensed factor attempting to enforce
a construction contract.  If a loan, check the contract clauses authorizing
the factor (secured party?) to proceed directly against the collateral.
Look for notice requirements, waiting periods, or anything else that would
impede the secured party's (factor's)  right to demand the account debtor
pay it rather than the debtor.   Next you need to look at perfection.  If
you decide under 679.302 that perfection by financing statement was
required, determine whether it was done and done correctly.  More than a few
priority disputes have been lost because of improper filing, poor collateral
descriptions, etc.  Although 679.318 may not help, you should consider it.
Do estoppel or waiver theories help at all?  Good luck!

 

Regards,

Lan White

(727) 797-5599

 

From: constructionlaw-bounces at lists.flabarrpptl.org
[mailto:constructionlaw-bounces at lists.flabarrpptl.org] On Behalf Of Croom,
Janet
Sent: Monday, February 13, 2012 2:46 PM
To: RPPTL constructionlaw
Subject: [RPPTL-constructionlaw] UCC Factoring Agreements and Subs Gone Out
of Business

 

 

Hypothetical:  Client is Sub which has Sub-Sub that goes out of business.
Before going out of business, Sub-Sub retains Accounts Receivable company.
Pursuant to UCC/Florida statutes, Sub makes payments to A/R firm, but
accidently pays Sub-Sub 2 times.  Sub-Sub gone.  A/R company pursuing Sub
for 2 "unauthorized" payments made directly to Sub-Sub, rather than A/R
company.  Additional facts which may/may not be relevant:  Bonded job;
Request for Sworn Statement of Account and 10 Day Written Notice Of Intent
To Pay were served on Sub-Sub before it went out of business, with no
response, but I am not sure any of that matters in the UCC world.  Close to
6 figures at stake for Sub having to essentially "pay twice."

 

Query:  Anyone been successful in protecting construction client that is
being pursued by an A/R "factoring" company under the UCC/Florida statutes?


 

 

Janet Carney Croom, Esquire

Board Certified - Construction Law 

Board Certified - Business Litigation

Collins, Brown, Caldwell, Barkett & Garavaglia, Chartered

756 Beachland Boulevard

Vero Beach, FL  32963

Telephone:  772-231-4343

Fax:  772-234-5213

jcroom at verolaw.com <blocked::mailto:jburgess at verolaw.com> 

http://www.verolaw.com <blocked::mailto:www.cbc at verolaw.com> 

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