Legal Issue: Pagarés (promissory notes) to secure loans, debt, and trade credit.
The following case study is applicable to exporters, sellers, asset-based lenders, credit insurance companies, export development banks, debt collection agencies, and key leaders and professionals at those firms such as credit managers, credit analysts, underwriters, collection specialists, special risk managers, etc.
$1.5M Secured Transaction and Litigation Case Study
01 | Situation
03 | Intervention
Intervention
05 | Legal Action
02 | Problem
04 | Challenge
06 | Lesson
Our case lasted only 6.5 months in a federal court in Mexico. Compare that to another case pursued through an ordinary proceeding, where we did not have a pagaré or any other security device, which lasted around 4 years! (This was a complex case out of an international sales transaction. It had to be pursued in an unsuitable and unprepared court in a remote area of Mexico. Most ordinary proceedings will take less time, but hardly less than a year.) The lesson here is to always try to secure debt, loans, or trade credit through any available security device in Mexico. Pagarés are a great tool which are easy implement. They will help a creditor create a favorable litigation strategy.
01 | Situation
02 | Problem
03 | Intervention
04 | Challenge
05 | Legal Action
06 | Lesson
Our case lasted only 6.5 months in a federal court in Mexico. Compare that to another case pursued through an ordinary proceeding, where we did not have a pagaré or any other security device, which lasted around 4 years! (This was a complex case out of an international sales transaction. It had to be pursued in an unsuitable and unprepared court in a remote area of Mexico. Most ordinary proceedings will take less time, but hardly less than a year.) The lesson here is to always try to secure debt, loans, or trade credit through any available security device in Mexico. Pagarés are a great tool which are easy implement. They will help a creditor create a favorable litigation strategy.
"Before working with them, I had some anxiety about doing business in Mexico, as I felt I didn’t fully understand the potential risks involved. They did a great job revamping our documentation, but what really impressed me was the time and effort they spent helping our local credit department “sell” these new documents internally to the sales team, many of whom were initially apprehensive the stricter docs might hinder sales. HMH allayed those fears, and now, knowing that we now have a strong set of documents for credit sales, it has taken away a lot of the concern about credit risk. We now have confidence in granting or increasing credit knowing that we have the necessary tools to fully protect the company’s interests."
Services
Our services in Secured Transactions and Litigation early on of the sales process or upon negotiations or restructure of a loan or debt, are key to prevent or properly address a problem situation, as the one pointed out.
