Legal Issue: Manufacturing Equipment Supplier - First Cross-Border Collection
- Industry: Industrial Equipment Manufacturing
- Debt Amount: $187,000
- Age: 120 days past due
01 | Problem
A Texas-based equipment manufacturer delivered $187,000 in specialized machinery to a client in Mexico. After 90 days, communication ceased. When finally reached, the debtor claimed the company was insolvent, closing down, and heading toward bankruptcy. The manufacturer’s internal team hit a dead end, believing the entity had no assets left to seize. The CFO faced a total write-off, assuming that pursuing a bankrupt entity in a foreign legal system would be throwing good money after bad.
02 | Solution
HMH Legal launched an in-depth due diligence investigation. We uncovered that the debtor’s shareholders had incorporated a new entity to “start fresh” while leaving creditors behind—identifying the new business as an “alter ego” of the debtor. We confronted the representatives with this evidence. To avoid litigation against the new company and potential criminal fraud charges, we negotiated a strict payment plan. This agreement required the new company and shareholders to sign as corporate and personal guarantors, further secured by an enforceable Pagaré.
03 | Result
- Recovered: $187,000 (100% of debt)
- Timeline: Full recovery via scheduled payments in six months
- Legal costs: Zero upfront (no win/no fee)
The debtors honored the agreement to avoid legal escalation. The manufacturer not only recovered their full capital but realized the critical value of investigative due diligence in cross-border trade, giving them the confidence to continue expanding their Mexican market share.
"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.
