“What these three cases now present to us is a tangled, nearly indecipherable mess of repeated and convoluted contentions engulfed in more smoke than a Friday boys-night-out poker jamboree.”

See Log Furniture, Inc. v. Call, 180 Fed.Appx. 785 (10th Cir. (Utah) 2006), an otherwise unremarkable case about the lack of standing of anyone other than a Chapter 7 bankruptcy trustee to bring claims on behalf of a debtor.

Tips for Navigating in Troubled Financial Waters

Times are tight (duh!).  You or your clients may have debt, mortgages, or loans on the brink.  The folks at Utah Business (written by Steven L. Ingleby and Scott M. McCullough at Callister, Nebeker & McCullough) were kind enough to offer some tips to remember to which I have added a few notes for dealing with struggling clients:

• Recognize when you or your clients are in financial trouble and don’t procrastinate.  Are your clients keeping current on their bills?  Are you carrying an ever larger A/R balance (making you the de facto bank)?  The sooner you make the call the better off you will be—regardless which side of the debt you are on.  Communication with a lender early on will make a big difference to the lender if you want to try to restructure the debt.  Yes, there is the risk that the lender will know about your financial condition but in the current climate of bankruptcy and foreclosure, “lenders are keenly aware of their borrowers’ problems.  if your lender is, or can become comfortable with the belief that you can ultimately pay off the renegotiated loan, lenders may see that it is in their best interest to restructure your loan.”

• Be honest and accurate.  Oftentimes in order to avoid the short-term problem a borrower will be overly optimistic about their financial condition and chances of repaying a loan.  When dealing with clients who have ever-increasing outstanding bills, sit down with them and discuss the scope and goals of the work you perform for them and its value to their business.  Drill down to the core of the borrower’s or client’s problem and face the issues up front.  Borrowers risks later claims of misrepresentation, non-disclosure, and possibly fraud (assuming there is a policy to chase or a few nickels in your pocket) if they try to “fudge the facts.”  Also, the better information you have the better able you are to establish a workable and ultimately successful plan of action.  This is particularly true in litigation matters which may require expediting a more creative but less expensive/lucrative resolution (depending on which side of the case you are on).

• Lastly, don’t be afraid to bring in outside help.  For debt workouts, there are numerous professionals to assist including CPAs, attorneys, consultants and workout specialists.  Run some cost-benefit numbers and make a decision early on.  Lenders appreciate the third-party objective view.  In terms of assisting your client determine whether their present litigation will be successful (in terms of prosecution or defense) there are litigation services available to help make that decision.

Good luck.