CMA Daily News

Bankruptcy Point/Counterpoint NACM

Two of NACM's most popular legal minds went head-to-head during the recent "Bankruptcy Update: Point/Counterpoint" teleconference, where they discussed several BAPCPA protections for trade creditors, along with the most current related case law and the administrative ambiguities that accompany some creditor defenses. Bruce Nathan, Esq. of Lowenstein Sandler PC acted as the voice of the courts, while Wanda Borges, Esq. of Borges & Associates LLC acted as the voice of the trade creditor.

Several topics were discussed throughout the program, most notably the 503(b)(9) 20-day administrative claim and the increasing use of executory contracts among trade creditors. Speaking about the 20-day administrative claim, Nathan noted, "This is one of the biggest amendments of the BAPCPA," adding, "This has become a safety net for suppliers." He then discussed how trade creditors have to go about getting the actual claim. "This 20-day priority is not automatic," he said. "The Bankruptcy Code requires that this priority be granted after a notice and a hearing."

Problems arise with the 20-day administrative claim in terms of when the claim is actually supposed to be paid. "There's nothing in the statute that talks about when this claim is paid," said Nathan, noting that payment times differ from district to district. "It's the court that makes the decision."

Borges responded with her opinion of when the claim should technically be paid. "The Code is silent, but I think it should be paid now and should be paid in full," she said, offering advice to trade creditors when filing this claim. "You've got to move, you've got to move fast, and you've got to move furious." Later, Borges discussed her own personal experiences with executory contracts and their idiosyncrasies. "In the last six months, I have seen more issues with executory contracts with my clients and with trade creditors," she said. "It's effectively a contract where something has to be done on both sides. In order to have a Chapter 11 debtor agree to stay in the executory contract, the debtor has to pay, in full, all arrearages or provide adequate insurance that you're going to get paid." After hearing that, trade creditors might find the prospect of an executory contract quite alluring, but Borges and Nathan discussed the other issues and prerequisites that complicate the issue.

Other topics discussed included preferences, changes in the ordinary course of business defense and issues associated with the contemporaneous exchange for new value defense. For more information on NACM's teleconferences, or to register, click here.

Jacob Barron, NACM staff writer

How to Get Ahead in Accounting and Finance

Whether you’re an internal auditor, tax specialist or financial analyst, getting ahead – and increasing your marketability – requires staying up to date with professional trends. In the quickly evolving fields of accounting and finance, this can seem like a tall order.

Many of the changes for financial professionals stem from corporate governance regulations implemented in the early part of the decade. These have expanded the roles and stature of the profession in a business environment increasingly focused on ethics. Today, the renewed interest in bringing accuracy and transparency back to financial reporting has fueled demand for these practitioners and spurred interest in accounting as a career.

But to succeed, accounting and finance professionals must effectively address complexity in their fields and the need to stay current with emerging trends. In addition to complying with changing regulations, this new environment requires financial professionals to develop their expertise in the following areas:

Build communication skills. As companies increase their use of cross-functional teams to manage special projects, they expect accounting staff to collaborate with individuals from other departments such as information technology, purchasing and marketing. As professionals forge these new relationships, strong communication and interpersonal skills are essential, including the ability to convey complex financial information to non-financial audiences.

Technology expertise is key.  It’s critical to stay up to date on the latest technological innovations in accounting and finance. In addition to learning about new software applications, it’s valuable to develop expertise in such areas as financial systems conversions, and the design and implementation of custom accounting software. You also should make an effort to learn all you can about your company’s financial systems: Being able to maximize the use of new technology not only makes your job easier but also increases your value to your employer.

If you need to learn how to make best use of a new application, consider taking a computer or software class through a university extension program, or participate in a local software users’ group for the product you would like to learn more about. You also may want to investigate programs offered through professional associations, including seminars and publications focused on technology issues.

Consider obtaining a technology-related certification such as the certified information systems auditor (CISA), certified information systems security professional (CISSP) and the certified information technology professional (CITP).

Go global (in perspective). There’s a strong demand for accountants with international business skills. Indeed, organizations are seeking professionals who are not only familiar with global trends, but possess an understanding of accounting principles in other countries. As companies around the world adopt International Financial Reporting Standards (IFRS), there is expected to be increased pressure on U.S. firms to do the same. Individuals who are fluent in multiple languages have an advantage when pursuing positions at organizations with international operations or overseas clients.

Never stop learning. Continuing to build your professional skills and knowledge is a key way to increase your marketability. How? Businesses actively recruit accountants who’ve taken the initiative to further their education, from obtaining a master’s degree in business administration (MBA) to pursing a certification program such as certified public accountant (CPA) or certified management accountant (CMA). And here’s another bonus to additional education: Our company’s research shows that a graduate degree or professional certification can increase your starting salary in a new job by up to 10 percent.

A final piece of advice: You’ll have a hard time achieving your full potential unless others are aware of your expertise and accomplishments. Pursuing new challenges, such as volunteering to participate on special project teams, will help you steadily build awareness and better position you for future advancement opportunities.

By taking proactive steps to develop a broad skill set, financial professionals will be well positioned for a successful future. Working hard will always be critical to your success, but accountants with strong communication abilities, technology expertise, a global perspective and a lifelong commitment to learning place themselves on the fast track to career advancement.

Source: Founded in 1948, Robert Half Finance & Accounting, a division of Robert Half, is the world’s first and largest specialized financial recruiting service. The company has more than 350 offices throughout North America, Europe and the Asia-Pacific region. Search for jobs now or learn more at www.roberthalf.com. 

Conversation With A Debtor Presentation - Al Artis

Al Artis, VP of Finance at Sharper Image was our educational keynote speaker at CMA's Annual Meeting in April.

Many of the attendees requested copies of his slides and Al has graciously complied. You can download a PDF version of his presentation: Download conversation_with_debtor.pdf

I am also adding an embedded slideshow on the CMA Daily News site, so if you are reading this in your email click on the post title to see the show. We recorded the presentation also, and will make that available once it is edited, but the tripod did not always cooperate. Evidently it needs to be oiled.

| View | Upload your own

Subcontractors Say Payment Issues "Very Serious"

In the fall of 2007, 1,000 randomly selected ASA members had the opportunity to speak out about which construction industry issues concern them most in the biennial ASA Member Needs Assessment — a survey ASA uses to set priorities. Five issues, mainly payment-related, rose to the fore, and will be the main topics for ASA's advocacy and education efforts over the course of the next two years. Slow final payment figured most prominently in the results with nearly 73% of participants rating the issue as "very serious." Coming in second was pay-if-paid, which 64.5% of respondents rated "very serious." This was followed by indemnification/hold harmless (64%), retainage (62.2%) and slow progress payments (60%). These results did not change dramatically from ASA's 2005 Member Needs Assessment, indicating that payment issues are still at the core of subcontractors' public policy challenges.

For more information on the complete results of the 2007 Member Needs Assessment, contact ASA Customer Service Manager Emily Yunker at 703-684-3450:1333, or eyunker@asa-hq.com.

Source: American Subcontractors Association

Does Working Remotely Make You Uneasy?

Working outside of the office may not be all it’s cracked up to be. According to a recent survey developed by Robert Half, 48 percent of workers polled said their jobs would be more difficult if they worked in a different office as their supervisors. If you work remotely, consider these tips to stay connected with managers and colleagues:

• Provide frequent status reports. Establish a schedule for giving updates to your supervisor so he or she is aware of your workload. At a minimum, offer a weekly status report detailing tasks completed and in progress.
• Pick up the phone. While e-mail is an effective communication method, using the telephone can sometimes be more efficient and help strengthen ties with your manager and coworkers.
• Highlight your accomplishments. When you don’t see your supervisor regularly, tooting your own horn becomes even more important to get proper credit for your achievements.
• Meet face to face. Take advantage of all opportunities to meet in person with your manager and colleagues. Face-to-face discussions are imperative to stay connected, avoid miscommunication, and ensure you stay top of mind for desirable projects and promotions.

Source: Robert Half - Workvine.com

Vallejo one of few cities to use Chapter 9

By declaring bankruptcy, Vallejo has thrust itself into the national spotlight as a test case for thousands of floundering cities desperate to unload their extravagant public employee contracts.

"There's a wave of this coming across the U.S.," said Sajan George, an adviser to struggling public entities who worked on restructuring Orange County after it declared bankruptcy in 1994. "What happens in Vallejo could definitely set a precedent."

Battered by the plummeting housing market and skyrocketing public employee contracts, Vallejo made dubious history Tuesday night by becoming the largest California city to declare bankruptcy. The North Bay city of 117,000 was on track to start the fiscal year July 1 with a $16 million deficit and no money in reserve.

By declaring Chapter 9 bankruptcy, the city hopes to freeze its debts and gain time to renegotiate its police and fire contracts, which comprise about 74 percent of its $80 million general fund budget. It also hopes a judge will void part or all of the contracts, allowing the city and unions to start from scratch.

"It's clear the way we've been doing business has not served us well," said City Councilman Tom Bartee at Tuesday's meeting. "We have to change that."

Because so few public entities have declared bankruptcy, no one's sure how labor contracts will be affected. Vallejo's public safety unions have vowed to fight the proceedings, arguing that the city has plenty of money stashed in hidden accounts and is using bankruptcy to avoid paying police and fire fighters what they're owed.

The unions commissioned a report by Harvey Rose auditing firm in San Francisco that concluded the city has other ways to balance its budget besides slashing salaries, staffing and benefits, union leaders said. The report has not been made public because it's part of ongoing labor negotiations.

Meanwhile, the unions would like an independent state audit of Vallejo's books.

"We don't believe they're insolvent," said Vallejo police Detective Mat Mustard, vice president of the police union. "But by declaring bankruptcy, they've taken a financial crisis and turned it into a catastrophe. It's like using an elephant gun to shoot an ant."

It's very possible a judge will void Vallejo's labor contracts, George said. When airlines began filing bankruptcy several years ago, judges allowed them to renegotiate their union contracts, making bankruptcy an attractive option across the airline industry, he said.

Even so, bankruptcy is an extreme measure for a public entity, he said. Thousands of cities across the United States are in the same boat as Vallejo, but nearly all of them find other ways to avoid Chapter 9. They cut and outsource services, share services with neighboring cities, sell property and raise taxes and fees.

"Chapter 9 is still relatively unknown," he said. "It's not common now, but depending what happens in Vallejo it may become more common."

Vallejo intends to keep services at their current level throughout the bankruptcy proceedings, which are likely to take years, said city spokeswoman Joann West. But it's likely that the voters will be asked in November to pay higher taxes, several city council members said Tuesday.

Bankruptcy is not a cheap option. Legal fees may climb as high as $2 million, the city's credit rating will be damaged, developers and investors may avoid the city until its finances are resolved and property values may fall even further because of the public stigma, bankruptcy experts said.

The only other California city to declare bankruptcy is Desert Hot Springs, a city of about 20,000 near Palm Springs. Desert Hot Springs (Riverside County) filed Chapter 9 in 2001 after losing a lawsuit from a developer.

Bankruptcy allowed the city to continue providing services and pay its vendors, but at a steep price, said Mayor Yvonne Parks.

"I think there was a stigma," she said Thursday. "Developers and investors shied away from us. They came back eventually, but it was tough."

Still, the city was able to reorganize its finances, pay its debt and emerge from bankruptcy in 2004. This year the city earned an A credit rating, Parks said.

"Bankruptcy is not the worst thing in the world," she said. "I don't think anyone even thinks about bankruptcy when they visit Desert Hot Springs any more."

E-mail Carolyn Jones at carolynjones@sfchronicle.com.

Source: San Francisco Chronicle

anscers Video Tutorial - Submit an Alert

We are creating short video tutorials on how to use the anscers.com system. Click here to view the first one "Submit an Alert".

Send your feedback on the video to damadril@creditservices.org.

CMA Annual Meeting 2008 PHOTOS

As always we look marvelous, with special thanks to our photographer Harvey Branman at Photography As An Art.

Click this link to view all the photos. You can download those you like and comment on the photos.

Message From Paul Beretz, CMA Credit Executive of the Year

Pictured Kevan Dragoo and Paul Beretz.

"What an honor to receive the "Credit Executive of the Year" award for 2008" from CMA! I am really humbled by the recognition and now able to join the ranks of past CMA credit execs of the year, some of who were in attendance at the membership meeting.

I've spent all of my business life in and around credit management and this award is truly one that I will treasure.  Much of my life has been devoted to education - first as an avocation when I was in the corporate world, and now as a vocation as I begin my tenth year in consulting. Besides the undergraduate and graduate programs I teach, I'm very pleased to have have been involved  in both the development and instruction for on line, certificate eduction. This would include the FCIB International Risk Management program as well as CMA's courses in Business Credit Principles, Financial Statement Analysis and Interpretation and Credit Risk Assessment. It's a pleasure working with CMA, a vibrant association that is taking the lead in providing timely, on-line education for credit and business professionals."

CMA Credit Executive of the Year - Paul Beretz

Pictured Kevan Dragoo, CMA's Credit Executive of The Year 2007. Here is his awards presentation speech to this years nominees and winner:

"Every year CMA asks it members for nominees for Credit Executive of the Year.  To be nominated is very special as it starts with a recommendation by your peers, which lets you and others know you have made a difference in someone’s career and the CMA organization.  To win the award is very humbling, as Eddy Sumar, said last year when presenting the award to me.

We had 6 nominees this year and unfortunately only one can win, but I think you need to remember that you have all won the respect of your peers to get you to this point.

This years nominees are:

Brian Lacy
Nannette Bringard
Sandy McConnell
Gail McLeish
Paul Beretz
Jocelyn Chavez

This year’s winner has served as an officer for our industry credit groups and CMA’s Northern California Board in many areas.

He has worked on ancers.com and CMA’s encyclopedia of Credit.  He is a CICE (Certified International Credit Executive), he has written over 25 articles for various Credit related magazines, published 2 books and of coarse teaches Business Credit.

It is with great pleasure that I present the CMA Credit Executive of the Year – Paul Beretz."