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Business Credit Journal Business Credit Journal Business Credit Journal Business Credit Journal Business Credit Journal April 2007 Recent Case Law Development Under the 2005 Recent Case Law Development Under the 2005 Recent Case Law

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Business Credit Journal Business Credit Journal Business Credit Journal Business Credit Journal Business Credit Journal

7931 NE Halsey, Suite 200 • Portland, Oregon 97213 Tel: 503.257.0802 • Fax: 503.257.0247 www.nacmoregon.org April 2007 1 In This Issue In This Issue In This Issue In This Issue In This Issue Bankruptcy............................................ Cover Chair's Message ..................................... p 2 President's Message .............................. p 2 NACM Annual Meeting ....................... p 3 Credit Congress..................................... p 3 International Corner ............................. p 4 Legal Corner ......................................... p 5 Downstream Corner ............................. p 6 New Members ....................................... p 7 Roaring 20's Scrapbook ....................... p 8-14 Scholarships .......................................... p 15 Education ............................................... p 16 WRCC................................................... p 17 Credit Today's Salary Survey .............. p 17 Credit Manager's Index......................... p 18 CFDD Chapters .................................... p 19 Contacts ................................................. p 21

Recent Case Law Development Under the 2005 Recent Case Law Development Under the 2005 Recent Case Law Development Under the 2005 Recent Case Law Development Under the 2005 Recent Case Law Development Under the 2005 Amendments to the Bankruptcy Code—Part 1 Amendments to the Bankruptcy Code—Part 1 Amendments to the Bankruptcy Code—Part 1 Amendments to the Bankruptcy Code—Part 1 Amendments to the Bankruptcy Code—Part 1

by Bruce S. Nathan and Scott Cargill by Bruce S. Nathan and Scott Cargill by Bruce S. Nathan and Scott Cargill by Bruce S. Nathan and Scott Cargill by Bruce S. Nathan and Scott Cargill The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”) is applicable to bankruptcy cases that were filed on or after October 17, 2005. The BAPCPA has provided additional rights to trade creditors that the courts are just now beginning to interpret. This is a two part article discussing recent decisions under the BAPCPA that may affect the rights and obligations of trade creditors in bankruptcy

cases. Part one will discuss the BAPCPA’s impact on

reclamation claims, a new administrative priority claim for certain goods shipped to a debtor within 20 days of the bankruptcy filing, as well as the development of new debtor management compensation plans. Part two of the article, which will appear next month, will discuss the BAPCPA’s new requirements that creditors’ committees provide certain information concerning a debtor’s bankruptcy case to creditors and solicit creditors’ comments, a creditor’s recourse if it is not appointed to a creditors’ committee, and how the BAPCPA has assisted trade creditors in defending against preference claims. The BAPCPA modified the rights of reclamation claimholders under Section 546(c)(1) of the Bankruptcy Code by expanding the time period from 10 days to 45 days for making a reclamation

demand. A creditor can seek to reclaim goods sold in the ordinary

course of the creditor’s business that the debtor had received while insolvent within 45 days of its bankruptcy filing by satisfying certain requirements. The creditor must send a written demand for reclamation of its goods. The demand must identify which goods are subject to reclamation and must now be made within 45 days after the receipt of the goods, or if such time period expires after the date of the bankruptcy filing, then not later than 20 days from the date of the bankruptcy filing. The sole remedy, provided in Section 546(c)(1), for a successful reclamation creditor is return

f the goods.

The BAPCPA, Section 546(c)(1), also expressly provides that a creditor’s reclamation rights are subject to the prior rights of a holder of a security interest in the goods sought to be reclaimed. Recently, the Delaware bankruptcy court in In re Advanced Marketing Services, Inc. denied a creditor’s motion for a temporary restraining order to preserve the creditor’s more than $5 million reclamation claim. The court denied the injunction, holding that the creditor could not demonstrate a strong probability of success on the merits of its reclamation claim because the goods were subject to the floating lien of the debtor’s secured lenders. Section 503(b)(9) of the Bankruptcy Code is a new provision added by the BAPCPA that grants the seller of goods (not services) an administrative expense claim for goods sold to a debtor in the ordinary course of business during the 20 days prior to the bankruptcy filing. The provision is an alternative to a seller ...continue on page 20

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Business Credit Journal Business Credit Journal Business Credit Journal Business Credit Journal Business Credit Journal

7931 NE Halsey, Suite 200 • Portland, Oregon 97213 Tel: 503.257.0802 • Fax: 503.257.0247 www.nacmoregon.org April 2007 2 Message from Chairman of the Board Message from Chairman of the Board Message from Chairman of the Board Message from Chairman of the Board Message from Chairman of the Board Cheryl Wahlberg, CCE Cheryl Wahlberg, CCE Cheryl Wahlberg, CCE Cheryl Wahlberg, CCE Cheryl Wahlberg, CCE It seems impossible that one year ago, I was installed as your Chairman. What do they say? "The older you get the faster the time goes." And it really flew by! Yes, I am dating myself. My term as Chairman of the Board will end on April 26 at our annual

meeting. I hope to see many of you there to support your

new Board of Directors and thank those Directors who are leaving the Board. They have devoted time, expertise, and lots of effort into serving the members over the last year. When I joined the Board more than 7 years ago, one of the strengths mentioned at each planning session was the fact NACM Oregon was a leader in the industry. Innovation and diversity of services has always been

discussed. In an effort to be fiscally responsible, we have

looked for ways to be less dependent on a single source of revenue. A previous Board and affiliate President had the vision and foresight to purchase the Banfield Plaza Building. This has proven to be a sound decision. The building represents a large profitable asset of the corporation. In the last year, to maintain the quality of this asset, many upgrades have been

made. One of Lisa Rogstad’s many hats is building
management. She has done an excellent job negotiating and

working with the contractors. Thank you, Lisa. In a further effort to invest in the future of NACM Oregon, an idea formed when Dave Erickson was chair was to expand the credit reporting sources and additionally, to create our own Pacific Northwest database. This was the number one goal requested of management and staff at NACM this last year. This goal has been accomplished and our membership has the option of selecting reports from Experian, Equifax, and

ECredit. Along with 14 other affiliates, an alliance was

formed with NACM Tampa to create our own NACM

database. Kathy Linscott and her customer service team

identified some beta sites and testing is being done. The negotiations for the Pacific Northwest report are almost completed. Rod and his staff have accomplished the goals and objectives requested at the beginning of the year. Message from the President Message from the President Message from the President Message from the President Message from the President Rod Wheeland, CCE CAE Rod Wheeland, CCE CAE Rod Wheeland, CCE CAE Rod Wheeland, CCE CAE Rod Wheeland, CCE CAE The “Roaring 20's Gala” was a roaring success, with many NACM Oregon members and suppliers enjoying a night of frivolity and fund-raising at the MAC. Be sure to take a look at the pictures in this edition. There’s a lot going on in Salem, and our lobbyist Cindy Robert is keeping here eyes and ears on the legislature and committees to be sure we get our bills through and stop any inappropriate or unwarranted legislation impacting NACM Oregon members. Cindy will give a status report at the Annual Meeting on April 26. Please plan to join us! The NACM Oregon golf tournament will be held at Persimmon Golf Club on August 20. Plan to field a team of colleagues and/or friends that will help you take home a prize! We always appreciate your comments and constructive

criticism. These help us do a better job of being the premier

trade association for Oregon, southwest Washington, and southwest Idaho credit and financial operations, and your best business credit resource. Please let us hear from you.

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7931 NE Halsey, Suite 200 • Portland, Oregon 97213 Tel: 503.257.0802 • Fax: 503.257.0247 www.nacmoregon.org April 2007 3

2 0 0 7

NACM OREGON ANNUAL MEETING

OF THE

MEMBERSHP AND LUNCHEON

Thursday, April 26, 11 a.m. DoubleTree Lloyd Center

This event is a once-a-year opportunity to interact with NACM Oregon members from all industries. The Annual Meeting will be held at 11 a.m. We will have: ♦ Recognition of those members who have earned national certification; ♦ Election of directors to the Board; ♦ Review of 2006 and the financial results; and ♦ Future goals and plans. The luncheon will feature Cindy Robert, NACM Oregon legislative representative. Cindy will give an update on legislative activity and the status of bills that may affect NACM Oregon members. Robin Schauseil, President, NACM National, will provide a report on National's operations, professional

fferings, and new services.

Mark your calendar today and plan to attend. We look forward to seeing you! NACM's 111th NACM's 111th NACM's 111th NACM's 111th NACM's 111th Credit Congress & Credit Congress & Credit Congress & Credit Congress & Credit Congress & Exposition Exposition Exposition Exposition Exposition is the only national convention designed exclusively to meet your needs as today's credit professional. Come meet and network with

ther credit executives from

across the nation. This is the

nly exposition of this type and

is scheduled in the West every second or third year. The opening general session will feature Mark Sanborn, CSP, CPAE, Sanborn & Associates, Inc. Mr. Sanborn, member of the Speaker Hall of Fame, is known for his ability to both educate and entertain through his work. His presentation, "The Fred Factor: How to Make the Ordinary Extraordinary," explains how you too can become a Fred—providing you the means to reinvent your business and life through self-mastery, vision, empowerment, and services. The super session will include the NACM Annual Business Meeting and feature John Powers, Powers of Motivation Institute, as the keynote speaker. John's entire career has been

ne of effectively communicating with audiences. He is the

author of four bestselling books. The most recent is, The Junk- Drawer Corner-Store Front-Porch Blues. He has been a guest on hundreds of radio and television shows including Oprah and

Today. John has received two Emmy awards for his work in
television. He has worked with more than a thousand major

corporations and national associations to provide programs on how to succeed in a changing world. The convention offers attendees several educational sessions for all levels. Listed in the February issue of NACM's Business Credit magazine is a description of each session. Please read each description carefully when choosing a session to attend. If you are a first-time attendee, don't miss the First-Time Attendee Orientation Session on Sunday, June 10, 3-3:45 p.m. Learn what you need to know to get the most from the conference: where to go, what to do, and how to find what you need. NACM Oregon is available to take your registration. Contact Jeannie Snow, CBA, at 971.230.1186, 800.622.6985 ext. 186 or email jsnow@nacmoregon.org

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7931 NE Halsey, Suite 200 • Portland, Oregon 97213 Tel: 503.257.0802 • Fax: 503.257.0247 www.nacmoregon.org April 2007 4

International Corner International Corner International Corner International Corner International Corner

by Alice Knight Picture yourself in a sunny tropical country with gentle ocean breezes, blue skies, and friendly people. OK— you don’t understand the language, the money is funny, and you don’t recognize most

f the food, but get with the program!

This is your opportunity to get first- hand information on a country and its

economy. No more just reading dry,

third-party country risk analysis reports; you can get information directly from the people who work and live within that economy. During the last two months, we have been discussing the elements of a successful customer visit. 1. The establishment or growth of a good personal relationship with the customer. 2. A personal evaluation of the customer, the credit risk and the growth potential. 3. A personal evaluation of the country, the political/economic risk and the growth potential. 4. Increased sales or decreased potential liability for your company. From your office, item (3) is dependant on third-party Country Risk

Analysis. During your visit you have the
pportunity to see and feel the practical
applications. Ask lots of questions.

Ask your customers about the current

economy. Is it improving, slowing or the

same? What do they feel about the government policies? Do they think they are good for business or restrictive? If they sell to the government, are payments good, bad or impossible? Are they getting a lot of foreign competition for their main products? Is there new or proposed tax legislation that will impact their cashflow and profitability? When is the next election? What is their opinion of the candidates? Are your customers enthusiastic about the future or depressed about business conditions? What about education? Are many young people going

n to higher education within the country or

leaving the country for education? Are college graduates able to find good paying jobs or just menial labor. Are a lot of people unemployed? Is the middle class growing or shrinking? Are business owners moving family out of the country? Read the local papers. If the language is a problem, ask a customer to translate or bring them home to translate. Ask about the political leanings of the paper for a balanced frame of reference. Look around to see if people seem busy; are they shopping, working or just standing on the street corner? What kind of goods are in the stores: basic necessities, or luxury goods? Is there new construction and infrastructure development, or mainly abandoned projects? This information will not replace a third- party Country Risk Analysis but it gives a “feel,” a frame of reference to keep things in perspective. If an election or new tax legislation is in the works, be sure to watch for on-going information as the time approaches. One practical example: A customer who sells heavily to the government is potentially very vulnerable to a change in

government. We have seen this many times.

The change is extreme, fast, and in some cases, product-ordered and delivered under the old government is simply never paid for under the new one. Item (4) is directly dependant on items (1) through (3). Based on this visit will you upgrade your country risk and terms? If you upgrade the risk, be sure to review all the risk in that country, not just the customers you visited. Based on this visit will you increase, decrease, or leave the same the credit limit and trading terms on the specific customers you visited? These decisions will directly impact future sales and future potential liability. Last but not least, use this experience to test on-going information. No country remains static and things will change. How accurate will your customer predictions and your country evaluation be in 6 months, a year, or until the next election? None of us have a crystal ball, but the more we experience the culture and economy, the better our analysis should be. Alice Knight is Vice President of Finance & Administration for Paper Products Marketing (USA) Inc., Ms. Knight has more than 35 years

f experience in

International Finance and is an active member of FCIB and NACM. She has served as Co-Chair, Panel Member and Presenter at Annual Global Conferences, as President

f FCIB Forest Products Group, and

participated in FCIB Conferences in Mexico, Puerto Rico, Munich, and Brussels. She is currently a member of FCIB Board of Directors and the FCIB Hotline Committee. ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦

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7931 NE Halsey, Suite 200 • Portland, Oregon 97213 Tel: 503.257.0802 • Fax: 503.257.0247 www.nacmoregon.org April 2007 5

Legal Corner Legal Corner Legal Corner Legal Corner Legal Corner

The importance of having a well-drafted credit application/account agreement cannot be overstated. In addition to allowing you to choose where you can file a lawsuit against your delinquent customer, a properly drafted agreement will allow you to seek recovery of the costs you incur in filing suit. As you are probably aware, sometimes the cost of collecting a debt exceeds the amount of the debt itself. The “economics” of this situation is not only frustrating, but also has a significant economic impact on your business because it tends to result in a number of small dollar delinquent accounts that remain uncollected. While the amount of each of these accounts is typically small, the aggregate value of the accounts can be significant. One of the most significant costs associated with collecting a debt are attorney fees. Attorney fees are generally not recoverable from the delinquent customer unless such recovery is provided for by statute or in a written contract. Therefore, unless you have a written agreement that provides for the recovery of attorney fees, you will NOT be able to recover the fees incurred in suing your delinquent customer. In small collection cases, attorney fees often become the tail that wags the dog. Without the right to pursue your fees, it is very difficult to justify pursuing small to medium sized accounts receivable. Many of your delinquent clients are probably “experienced” debtors and are aware of this. Thus, threats of legal action may fall on deaf ears. In contrast, if you have an agreement that allows the recovery of attorney fees, you have a powerful “settlement hammer.” The “threat” of paying to defend a claim, the claim amount AND your fees typically makes an economically viable debtor listen to reason. The second biggest cost associated with debt collection is collection agency fees. With commercial accounts/debts, it is possible to recover a collection agency fee incurred in pursuing a delinquent customer. However, the right to recover such fees must be expressly stated in a written agreement with the customer. Otherwise, the fee paid to a collection agency is not

recoverable. The right to recover this fee not only

potentially puts more money in your pocket, but, like the attorney fee provision, it also provides significant leverage in settlement negotiations. As you can see, having a well-crafted agreement with your customer is important part of the collection process. These agreements should be entered into when the customer opens the account and the parties are on good

terms. If a customer is unwilling to sign such an

agreement, you should seriously consider whether it is worth doing business with that customer. William G. Fig is an attorney with Sussman Shank, LLP. His practice focuses on business litigation, construction law, environmental litigation, and consumer debtor/creditor

matters. Bill represents

creditors, general contractors, subcontractors, and small to mid-sized businesses. He holds a specialty certificate in environmental law with a focus

n hazardous wastes. Mr. Fig

has been active as a speaker and presenter at various NACM Oregon seminars. His email is billf@sussmanshank.com.

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7931 NE Halsey, Suite 200 • Portland, Oregon 97213 Tel: 503.257.0802 • Fax: 503.257.0247 www.nacmoregon.org April 2007 6

Downstream Corner Downstream Corner Downstream Corner Downstream Corner Downstream Corner

Debunking the Top Ten Payment Myths Debunking the Top Ten Payment Myths Debunking the Top Ten Payment Myths Debunking the Top Ten Payment Myths Debunking the Top Ten Payment Myths by Donald W. Gregory, Esq. Payment is the lifeblood of any subcontractor or

supplier. Yet many common myths adversely affect the

ability to timely secure payment. Here is my personal top ten.

1. “Don’t worry about it, we can always lien.”
1. “Don’t worry about it, we can always lien.”
1. “Don’t worry about it, we can always lien.”
1. “Don’t worry about it, we can always lien.”
1. “Don’t worry about it, we can always lien.”

While lien rights are important, they are not a substitute for good credit practices. Lien rights only attach to any equity in the property which can often be a problem on a troubled project. In addition, legal fees must be expended to foreclose or otherwise turn the lien into cash, and they frequently are not recoverable.

2. “We don’t care about anyone on the Project
2. “We don’t care about anyone on the Project
2. “We don’t care about anyone on the Project
2. “We don’t care about anyone on the Project
2. “We don’t care about anyone on the Project
ther than the customer.”
ther than the customer.”
ther than the customer.”
ther than the customer.”
ther than the customer.”

Big mistake, particularly if your customer needs cash flow on the job to pay your bill. Even if you negotiate good contract language with an honest and solid customer, you may still not be timely paid if your customer is not paid by others further up the “construction food chain” on the project. Consider the project’s financing and the reputation of others controlling the cash flow above.

3. “We’ll worry about payment terms after we
3. “We’ll worry about payment terms after we
3. “We’ll worry about payment terms after we
3. “We’ll worry about payment terms after we
3. “We’ll worry about payment terms after we

get the job.” get the job.” get the job.” get the job.” get the job.”

Wrong. Once you are awarded the job you lose

leverage to walk away from unfair payment terms, particularly if the contractor has relied upon your bid in securing the job. It is much better to condition your bid upon acceptable contract language so you maintain leverage to secure fair payment terms, or if that fails, to walk away to a safer job.

4. “Don’t rock the boat until the job is done.”
4. “Don’t rock the boat until the job is done.”
4. “Don’t rock the boat until the job is done.”
4. “Don’t rock the boat until the job is done.”
4. “Don’t rock the boat until the job is done.”

Many in the construction industry fear disrupting relationships on the job and the flow of payment so much that they consciously avoid any notice, or discussion, of problems until after the job is virtually finished. This inevitably leads to shouts of protest that “we should have known sooner” and bad blood that often results in litigation that could have been avoided if the problem was addressed timely.

5. “It’s a bonded job, so no worries.”
5. “It’s a bonded job, so no worries.”
5. “It’s a bonded job, so no worries.”
5. “It’s a bonded job, so no worries.”
5. “It’s a bonded job, so no worries.”

While it is much better to provide labor or material to a bonded job than not, a bond claim does not automatically equate with timely payment. Bonding companies are notorious for inaction and often require legal prodding to satisfy their obligations, all of which requires time and expense, which erodes the bottom line.

6. “Don’t offend the customer by asking for a
6. “Don’t offend the customer by asking for a
6. “Don’t offend the customer by asking for a
6. “Don’t offend the customer by asking for a
6. “Don’t offend the customer by asking for a

personal guarantee.” personal guarantee.” personal guarantee.” personal guarantee.” personal guarantee.” While no customer wants to be asked for a personal guarantee, suppliers who insist upon guarantees from

wners of marginally capitalized companies are much more

likely to be paid even if the company buying the materials encounters financial difficulty.

7. “There is no real difference between “Pay
7. “There is no real difference between “Pay
7. “There is no real difference between “Pay
7. “There is no real difference between “Pay
7. “There is no real difference between “Pay

when Paid” and “Pay if Paid,” is there?” when Paid” and “Pay if Paid,” is there?” when Paid” and “Pay if Paid,” is there?” when Paid” and “Pay if Paid,” is there?” when Paid” and “Pay if Paid,” is there?” There sure is. “Pay when paid” in many jurisdictions means that while timing of payment may be delayed, there still is an obligation to pay within a reasonable period of

time. In contrast, “Pay if paid” (utilizing words like “if” and

“condition precedent”) means that not only timing but also entitlement to payment can be derailed if payment is not received by the contractor from the owner. This difference can be the difference between eventually receiving payment or nothing at all.

8. “Waiving lien rights without consideration is
8. “Waiving lien rights without consideration is
8. “Waiving lien rights without consideration is
8. “Waiving lien rights without consideration is
8. “Waiving lien rights without consideration is

unenforceable, right?” unenforceable, right?” unenforceable, right?” unenforceable, right?” unenforceable, right?” Wrong (at least in many states including Ohio). Contrary ...continue on page 7

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Business Credit Journal Business Credit Journal Business Credit Journal Business Credit Journal Business Credit Journal

7931 NE Halsey, Suite 200 • Portland, Oregon 97213 Tel: 503.257.0802 • Fax: 503.257.0247 www.nacmoregon.org April 2007 7 to well-accepted construction folklore, lien rights can be waived “upfront” in a contract without additional consideration in many jurisdictions. So, don’t do it. If someone wants you to waive lien rights before you even step on the job, there is probably a reason for it.

9. “A bad contract is better than no contract at
9. “A bad contract is better than no contract at
9. “A bad contract is better than no contract at
9. “A bad contract is better than no contract at
9. “A bad contract is better than no contract at

all.” all.” all.” all.” all.” If you provide labor or material, you have a contract with your customer, either oral or written. While a written contract eliminates many uncertainties about the terms, many written contracts shift risk to those downstream and take away legal rights. Therefore

ften a handshake deal or a simple purchase order is

better than a one-sided written subcontract.

10. “Let’s wait as long as possible before we have to
10. “Let’s wait as long as possible before we have to
10. “Let’s wait as long as possible before we have to
10. “Let’s wait as long as possible before we have to
10. “Let’s wait as long as possible before we have to

incur legal fees.” incur legal fees.” incur legal fees.” incur legal fees.” incur legal fees.” No subcontractor wants to incur legal fees, particularly if not absolutely necessary. As a result, many wait longer than prudent to get legal advice or take legal action. This approach

ften is “penny wise and pound foolish” in that the earlier a

legal problem is addressed and solved the less resources are expended and often with more productive results. Typically in payment disputes, “the squeaky wheel gets the grease” and “the early bird gets the worm” of payment before others. Once a payment problem develops, it typically only gets worse over time. Subcontractors and suppliers that do not fall prey to these payment myths will be more profitable as collection rates increase as part of a solid credit strategy. Top Ten Payment Myths Top Ten Payment Myths Top Ten Payment Myths Top Ten Payment Myths Top Ten Payment Myths... ... ... ... ...from page 6 Donald Gregory, Esq., Kegler, Brown, Hill & Ritter, Columbus, Ohio, is an experienced construction attorney, as well as general counsel to the American Subcontractors Association. He may be reached at dgregory@keglerbrown.com. Albina Pipe Bending Albina Pipe Bending Albina Pipe Bending Albina Pipe Bending Albina Pipe Bending, a metal fabrication & bending firm. Deborah Wilson 503.692.6010 12080 SW Myslony St. Tualatin OR 97062 Bond Experts II, Ltd. Bond Experts II, Ltd. Bond Experts II, Ltd. Bond Experts II, Ltd. Bond Experts II, Ltd., an insurance firm. Kris Yates 503.292.2582 5319 SW Westgate Dr. Portland OR 97221 CPM Development Corp. CPM Development Corp. CPM Development Corp. CPM Development Corp. CPM Development Corp. DBA: River Bend Sand & Gravel DBA: River Bend Sand & Gravel DBA: River Bend Sand & Gravel DBA: River Bend Sand & Gravel DBA: River Bend Sand & Gravel, a supplier of aggregates, asphalt, ready-mix concrete, and paving services. Connie Johnson 503.363.9281 PO Box 12095 Salem OR 97309 Harrang Long Gary Rudnick P.C. Harrang Long Gary Rudnick P.C. Harrang Long Gary Rudnick P.C. Harrang Long Gary Rudnick P.C. Harrang Long Gary Rudnick P.C., a law firm. Roger Rasmussen, CBF 541.485.0220 PO Box 11620 Eugene OR 97440-3820 Norcan Handling Systems, LLC Norcan Handling Systems, LLC Norcan Handling Systems, LLC Norcan Handling Systems, LLC Norcan Handling Systems, LLC, a storage container rental firm. Tamie Sperling 503.905.3999 PO Box 68233 Portland OR 97268 Rose City Label Co. Rose City Label Co. Rose City Label Co. Rose City Label Co. Rose City Label Co., a custom label manufacturer. Heidi Dietz 503.777.4711 7235 SE Label Lane Portland OR 97206 Sam Medical Products Sam Medical Products Sam Medical Products Sam Medical Products Sam Medical Products, a manufacturer and distributor of medical products. Jan Owens 503.639.5474 7409 SW Tech Center Dr., Ste. 150 Tigard OR 97223 Western Power & Equipment Western Power & Equipment Western Power & Equipment Western Power & Equipment Western Power & Equipment, sell, rent, and service construction, industrial, and agricultural equipment. Ken Wetzel 503.283.2461 PO Box 11206 Portland OR 97211

Welcome New Members Welcome New Members Welcome New Members Welcome New Members Welcome New Members

SLIDE 8

Roaring 20’s Gala Scrapbook

The "Big Cheeses" get pinched. From left to right: Don Conklin, NACM BCS; Bill Meeker, NACM Tampa, Inc.; Chuck Monson, NACM Inland Northwest; and Rod Wheeland, NACM Oregon. Lori (NACM BCS Chairman of the Board) and Milt Farvour have their "Glad Rags" on.

SLIDE 9

Lilly Lemon all "swanky" in her "rags"

found out she was getting bailed out of jail for five "clams!" Alice Campbell, CBF, CICP, Oregon Steel Mills, is in the clink and gets cuffed to the bars! Hanna, Johnny, Sara, and Dustin show the crowd how the Lindy Hop and Charleston is done.

SLIDE 10 Bill Fig, attorney, Sussman Shank, LLP is going to have to do some smooth talking to get himself out of this jam. Betty Beeson Bauder, CBF, of Pendleton Woolen Mills and husband Richard, take time out to pose for their picture. Dave Erickson, CCE, Allports Forwarding, Inc., and wife Linda, are having a great time.

SLIDE 11 Cheri Loyd of West Coast Paper and her husband Norm, are leaving the gala with items in hand. Dennis Corey, NACM Oregon, is wheeling the Gardener's Delight auction item to the winning bidder, Cheri Loyd...

... and Kirk Lind from

Sterling Savings Bank, had the lucky key that opened the Money Box. Everyone at the gala is having a great time and on their best behavior; especially with you know who in the background. No one wants to get thrown in the clink!

SLIDE 12 Bill Meeker and Fran Hand smile for the camera. Rumor has it someone sitting at this table had their picture on the bottles of the Princess Wine. The Keystone Cops (from left to right): Matthew Van Dyke, James Linscott, and Dennis Corey were busy all night. Jeff Stewart, Oregon Steel Mills, and wife Shelley are all smiles for the camera. Cheryl Wahlberg, CCE, Food Services of American, NACM Oregon Chairman of the Board with her Princess Wine.

SLIDE 13

Hal Wineland, CCE, of

Pendleton Woolen Mills, and wife Ann. Pat Jones, Consolidated Supply, and wife Marilyn get tossed in jail together. From right to left: Jeff O'Banion, CCE, CICP, NW Natural, and friends Jane Tofell and Esther Nichols, take time out from viewing the auction items to have their picture taken.

SLIDE 14

A Special Thanks to Donors! A Special Thanks to Donors! A Special Thanks to Donors! A Special Thanks to Donors! A Special Thanks to Donors!

From the Foundation, NACM Oregon, and the credit and financial professionals who From the Foundation, NACM Oregon, and the credit and financial professionals who From the Foundation, NACM Oregon, and the credit and financial professionals who From the Foundation, NACM Oregon, and the credit and financial professionals who From the Foundation, NACM Oregon, and the credit and financial professionals who benefit from your donations and your generosity, benefit from your donations and your generosity, benefit from your donations and your generosity, benefit from your donations and your generosity, benefit from your donations and your generosity, thank you! thank you! thank you! thank you! thank you! A-1 Analysis Alexis Hotel Allports Forwarding Baxter Auto Parts —Performance Warehouse Bed Bath & Beyond Mike & Karen Bena Boise Building Alice Campbell Canfor Wood Products Chuck Carnese, Esq. Chateau Faire La Pont Columbia River Knife & Tool Columbia Sportswear Craft Warehouse/Aloha Craft Warehouse/Gresham Craft Warehouse/Vancouver Disneyland Domtar, Inc. Dunn Carney Allen Higgins & Tongue LLP eCredit Equifax Dave & Linda Erickson Experian Gateway Safe & Lock Harrang Long Gary Rudnick PC Hoffman Stewart & Schmidt PC Hotel deLuxe Hotel Monaco - Portland Hotel Vintage Plaza International Intimates, Inc. Interval International JBL&K Doug Jacobson Jim Jensen, CCE Jockey International JP Consultants LLC King Estate Winery Catlin L. Lawson Leatherman Tool Group James Linscott Louisiana Pacific Corp. Chei Loyd Lynne Lyons Mark McCaslin MDS Sales Medic First Aid Melvin Mark Properties Mount Bachelor Village NACM National NACM Oregon NACM Oregon Employees: Joyce Arevalo Frank Bernard Dennis Corey Kathy Gibson Shelly Hackett Elizabeth Heintz Kathy Linscott Karen Mowrey Denise Redding Lisa Rogstad Barbara Salazar Claudia Sarinana Barb Smidt Jeannie Snow, CBA Matthew Van Dyke NACM BCS - Seattle Don Conklin NACM Spokane NACM Tampa NW Natural Jeffrey O'Banion, CCE, CICP OneCreditSource Pacific Metal Co. Paige Premium Denim Paramount International Pazzo Ristorante Pendleton Woolen Mills PGE Park Phillips Van Heusen Portland Spirit Red Star Tavern RiverPlace Hotel Robin Schauseil Schnitzer Steel Industries Schwabe Williamson & Wyatt, Inc. Joyce Simas Dave Simanton Six Flags Magic Mountain Skamania Lodge Wayne & Patti Smathers Sokol Blosser Winery Spicers Paper Sunriver Resort The Benson Hotel The Governor Hotel The Metropolitan Hotel The Mill Casino The Stockpot Restaurant Three Degrees Restaurant Timber Products Co. LLP Tolko Finance Ltd. Tricor Printing Typhoon Restaurants Mark Tuniewicz Mark Wada, Esq. Dale Walker West Coast Bank West Fraser International Ltd. Rod & Janet Wheeland Widmer Brothers Brewing Co. Wilf’s Restaurant Wolverine World Wide Xerox Corp.

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Business Credit Journal Business Credit Journal Business Credit Journal Business Credit Journal Business Credit Journal

7931 NE Halsey, Suite 200 • Portland, Oregon 97213 Tel: 503.257.0802 • Fax: 503.257.0247 www.nacmoregon.org April 2007 15

Three (3) $500 scholarships to the NACM Credit Congress

June 10 - 13, 2007, Bally’s Las Vegas, Nevada Deadline: April 30, 2007

Two (2) $500 scholarships to be applied towards the course, "Business

Credit Principles" offered during the 2007 Credit Congress. This is a comprehensive course for potential CBA applicants. Must show proof

f completion for reimbursement.

Deadline: April 30, 2007

Five (5) $500 scholarships to the Pacific Northwest Credit Congress

(PNWCC), September 20-22, 2007, Tacoma, Washington Deadline: August 17, 2007

NACM Seminars - $1,000
Certification Fees—to establish files and for continuing certifications and
recertifications. $2,000
College Courses approved and required for Accreditation and
Certification. Includes on-line courses offered through NACM National

Education Department—proof of completion required—$2,000

Certified International Credit Professional Fee—FCIB on-line course $350
Phylliss Clark Scholarships: Three (3) $500. Applicants must be a CFDD

member and first- time attendee at the Pacific Northwest Credit Congress. Each chapter—Portland, Salem, and Eugene is allocated one (1) scholarship. Deadline: August 17, 2007 Contact Lou Rice, Pacific Metal Co., for an application or more information at 503.454.1051 or lrice@pacificmetal.com.

NACM-Oregon Foundation Scholarship Funds NACM-Oregon Foundation Scholarship Funds NACM-Oregon Foundation Scholarship Funds NACM-Oregon Foundation Scholarship Funds NACM-Oregon Foundation Scholarship Funds Available for 2007 Available for 2007 Available for 2007 Available for 2007 Available for 2007

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7931 NE Halsey, Suite 200 • Portland, Oregon 97213 Tel: 503.257.0802 • Fax: 503.257.0247 www.nacmoregon.org April 2007 16

Education Education Education Education Education

Good Morning Credit!

od Morning Credit!
od Morning Credit!
od Morning Credit!
od Morning Credit!

The Good Morning Credit! series is an excellent way to learn fundamental credit and collection management techniques, to train new staff, or to have a good review. The program starts at 7:30 a.m., so you or your staff can head back to the office by 9. Join us for these informative sessions packed with practical tools for immediate use. Second Tuesday of each month (except August), 7:30 - 9 a.m. NACM Oregon, 7931 NE Halsey, Suite 201, Portland $35 (M); $45 (NM) .15 CEU per class May 8— May 8— May 8— May 8— May 8—Credit Applications June 12— June 12— June 12— June 12— June 12—Checking Credit References Half-day Seminars Half-day Seminars Half-day Seminars Half-day Seminars Half-day Seminars May 3— May 3— May 3— May 3— May 3—Business Writing, presented by Gail Tycer, Strategic Business Communication. Participants will learn how to write less, say more, and get results through a common-sense approach to writing fast, clear, effective letters, emails, proposals, reports, and instructions. 8:30 a.m. - 12 p.m. NACM Oregon 7931 NE Halsey, Ste. 201, Portland $95 (M); $170 (NM) June 7— June 7— June 7— June 7— June 7—Exceptional Customer Service in the Credit Depart- ment, presented by Jean Boudreau, Columbia Sportswear 8:30 a.m. - 12 p.m. NACM Oregon, 7931 NE Halsey, Ste. 201, Portland $95 (M); $170 (NM) All-day Seminars All-day Seminars All-day Seminars All-day Seminars All-day Seminars May 9— May 9— May 9— May 9— May 9—International Credit, presented by Dave Erickson, CCE, Allports Forwarding, Inc. 8:30 a.m. - 4 p.m. NACM Oregon, 7931 NE Halsey, Ste. 201, Portland $150 (M); $225 (NM)

Webinars Webinars Webinars Webinars Webinars

Education at your desk! Education at your desk! Education at your desk! Education at your desk! Education at your desk! April 17, 2007 April 17, 2007 April 17, 2007 April 17, 2007 April 17, 2007 "Oregon Construction Lien Law," "Oregon Construction Lien Law," "Oregon Construction Lien Law," "Oregon Construction Lien Law," "Oregon Construction Lien Law," presented by the Sussman Shank Construction presented by the Sussman Shank Construction presented by the Sussman Shank Construction presented by the Sussman Shank Construction presented by the Sussman Shank Construction Group Group Group Group Group This group will provide an overview of the Oregon State lien process. May 15, 2007 May 15, 2007 May 15, 2007 May 15, 2007 May 15, 2007 "Washington Construction Lien Law," presented "Washington Construction Lien Law," presented "Washington Construction Lien Law," presented "Washington Construction Lien Law," presented "Washington Construction Lien Law," presented by the Sussman Shank Construction Group by the Sussman Shank Construction Group by the Sussman Shank Construction Group by the Sussman Shank Construction Group by the Sussman Shank Construction Group This group will provide an overview of the Washington State lien process. June 19, 2007 June 19, 2007 June 19, 2007 June 19, 2007 June 19, 2007 "Idaho Construction Lien Law," presented by the "Idaho Construction Lien Law," presented by the "Idaho Construction Lien Law," presented by the "Idaho Construction Lien Law," presented by the "Idaho Construction Lien Law," presented by the Sussman Shank Construction Group Sussman Shank Construction Group Sussman Shank Construction Group Sussman Shank Construction Group Sussman Shank Construction Group This group will provide an overview of the Idaho State lien process. All sessions are scheduled from 9 - 10 a.m. (DST) and require high-speed internet connection and telephone line for

participation. $49.95 per registered site. Continuing education

credits (.10) for registered attendees only. For more information contact Jeannie Snow, CBA, at 971.230.1186 or register online at http://members.nacmoregon.org/events/

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7931 NE Halsey, Suite 200 • Portland, Oregon 97213 Tel: 503.257.0802 • Fax: 503.257.0247 www.nacmoregon.org April 2007 17

Annual NACM Western Region Annual NACM Western Region Annual NACM Western Region Annual NACM Western Region Annual NACM Western Region Credit Conference Credit Conference Credit Conference Credit Conference Credit Conference

October 17-19, 2007, October 17-19, 2007, October 17-19, 2007, October 17-19, 2007, October 17-19, 2007, Monte Carlo Resort & Casino Monte Carlo Resort & Casino Monte Carlo Resort & Casino Monte Carlo Resort & Casino Monte Carlo Resort & Casino Las Vegas, Nevada Las Vegas, Nevada Las Vegas, Nevada Las Vegas, Nevada Las Vegas, Nevada Be there for the 20th Annual NACM Western Region Credit Conference (WRCC). The conference is designed for anyone who performs the business credit function at your company. Our educational tracks support entry level to executive experience, from the Credit Analyst to the CFO. Contact Jodi Owens at jowens@creditservices.org for more information.

Credit Today's 2007 Salary & Credit Today's 2007 Salary & Credit Today's 2007 Salary & Credit Today's 2007 Salary & Credit Today's 2007 Salary & Job Satisfaction Survey Is Now Job Satisfaction Survey Is Now Job Satisfaction Survey Is Now Job Satisfaction Survey Is Now Job Satisfaction Survey Is Now Open! Open! Open! Open! Open!

It’s time for Credit Today’s 2007 Salary & Job Satisfaction

Survey. Your participation is very important to help ensure a

robust sample size to enable us to “drill down” in the data to have meaningful data in various segments. As a special thanks for your participation, all Credit Today Members will receive a free copy of the entire $175 report. Non-members will receive a free copy of the Executive

Summary. Make sure you use the signup page following the

survey to let us know you participated! The survey should take about 10 minutes, depending upon whether or not you’ve got your salary data handy. The survey has a total of 50 questions, broken down into 6 “bite-sized”

sections. You’ll see a progress bar at the bottom of each page

so you can see how far you’ve gone. Keep in mind that your answers are saved as soon as you move on to the next page. If you close your browser in the middle of a page, or refresh your screen, you will lose only that

page. Also, the survey is anonymous.

For your information, there are 6 parts to the survey:

Tell us about you and your company.

Credit staff positions Description of your job

Your department
Your job satisfaction

Go to http://credittoday.surveys.sgizmo.com/ to complete the questionnaire.

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7931 NE Halsey, Suite 200 • Portland, Oregon 97213 Tel: 503.257.0802 • Fax: 503.257.0247 www.nacmoregon.org April 2007 18

Credit Manager’s Index Credit Manager’s Index Credit Manager’s Index Credit Manager’s Index Credit Manager’s Index

The seasonally adjusted Credit Manager’s Index (CMI) fell in March for the seventh time in eight months, losing 1.6%. The decline was driven by the dollar collections component, which fell a record 7.8%, but the weakness was

widespread. “Even without the drag of the dollar collections component, the combined index would have fallen, as a

total of eight out of the 10 components fell,” said Dan North, Chief Economist with credit insurer Euler Hermes

ACI. “Collections problems also appeared in the accounts placed for collection component, which is now below the

50 level, signaling economic contraction,” he noted. “The weakness in collections suggests that businesses are having cash flow problems, reflecting the erosion of the economy as a whole.” “Certainly credit managers are starting to feel the effects of a deflating housing bubble and a slowdown in the economy caused by the Fed’s tightening,” North continued. “Businesses in both services and manufacturing have been particularly hard hit by the slowdown in construction spending and the dramatic fall-off in the demand for building

materials. With the median price of existing homes falling for seven consecutive months on a year-over-year basis, it

would appear that the effects of the bursting housing market bubble will continue for some time. In the meantime, the plethora of negative data from the first two months of 2007, such as weak job growth, a dramatic fall in durable goods

rders, slack retail sales, and of course deteriorating conditions in the sub-prime mortgage market, all reflect an

economy sure to continue in slowing.” Combined Manufacturing Combined Manufacturing Combined Manufacturing Combined Manufacturing Combined Manufacturing & Service Sectors (seasonally adjusted) Service Sectors (seasonally adjusted) Service Sectors (seasonally adjusted) Service Sectors (seasonally adjusted) Service Sectors (seasonally adjusted) Mar Jan ‘06 Apr May Jun Jul Aug Sep Oct Nov Dec ‘07 Feb Mar 65.8 63.3 61.5 65.4 67.8 62.8 63.5 56.3 59.5 60.9 61.6 59.6 58.1 60.9 57.4 55.7 55.7 59.0 62.5 57.9 56.2 56.5 60.5 60.9 52.5 55.9 64.6 63.5 58.6 62.5 61.9 63.3 60.0 58.3 62.6 59.5 64.8 66.2 58.4 67.4 66.2 65.5 64.8 69.9 66.4 62.4 63.2 64.0 63.7 65.3 63.6 62.4 64.7 64.7 64.7 64.7 64.7 62.6 62.6 62.6 62.6 62.6 60.3 60.3 60.3 60.3 60.3 62.1 62.1 62.1 62.1 62.1 64.7 64.7 64.7 64.7 64.7 63.8 63.8 63.8 63.8 63.8 60.9 60.9 60.9 60.9 60.9 58.5 58.5 58.5 58.5 58.5 60.6 60.6 60.6 60.6 60.6 61.2 61.2 61.2 61.2 61.2 63.2 63.2 63.2 63.2 63.2 60.5 60.5 60.5 60.5 60.5 58.7 58.7 58.7 58.7 58.7 53.9 53.8 50.6 51.5 52.6 53.6 53.3 54.8 51.7 50.1 51.6 52.7 51.9 52.7 52.0 50.5 55.2 52.0 50.1 55.0 53.1 50.7 47.8 51.4 51.3 49.6 50.0 52.4 49.3 51.1 51.1 50.4 52.3 49.7 49.9 47.9 52.7 53.5 51.9 54.6 53.5 48.5 56.5 52.2 51.3 55.8 52.2 50.2 48.1 50.9 52.6 55.0 51.2 51.8 49.0 49.7 50.5 51.7 50.6 50.5 51.3 49.2 53.2 54.5 50.2 59.7 60.8 59.2 59.2 59.1 60.5 60.2 59.1 56.3 59.7 59.8 59.5 56.6 53.7 53.7 53.7 53.7 53.7 54.0 54.0 54.0 54.0 54.0 51.2 51.2 51.2 51.2 51.2 53.9 53.9 53.9 53.9 53.9 52.9 52.9 52.9 52.9 52.9 52.9 52.9 52.9 52.9 52.9 54.5 54.5 54.5 54.5 54.5 53.2 53.2 53.2 53.2 53.2 51.7 51.7 51.7 51.7 51.7 50.5 50.5 50.5 50.5 50.5 53.3 53.3 53.3 53.3 53.3 54.0 54.0 54.0 54.0 54.0 52.5 52.5 52.5 52.5 52.5 57.5 57.5 57.5 57.5 57.5 59.0 59.0 59.0 59.0 59.0 57.0 57.0 57.0 57.0 57.0 55.5 55.5 55.5 55.5 55.5 55.1 55.1 55.1 55.1 55.1 55.6 55.6 55.6 55.6 55.6 53.7 53.7 53.7 53.7 53.7 54.5 54.5 54.5 54.5 54.5 54.1 54.1 54.1 54.1 54.1 54.1 54.1 54.1 54.1 54.1 54.2 54.2 54.2 54.2 54.2 53.3 53.3 53.3 53.3 53.3 N/A N/A N/A N/A N/A Sales New credit applications Dollar collections Amount of credit extended Index of favorable factors Index of favorable factors Index of favorable factors Index of favorable factors Index of favorable factors Rejection of credit applications Accounts placed for collections Disputes Dollar amount beyond terms Dollar amount of customer deductions Filings for bankruptcies Index of unfavorable factors Index of unfavorable factors Index of unfavorable factors Index of unfavorable factors Index of unfavorable factors ISM Combined Sectors Index ISM Combined Sectors Index ISM Combined Sectors Index ISM Combined Sectors Index ISM Combined Sectors Index

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7931 NE Halsey, Suite 200 • Portland, Oregon 97213 Tel: 503.257.0802 • Fax: 503.257.0247 www.nacmoregon.org April 2007 19 Salem/Albany Salem/Albany Salem/Albany Salem/Albany Salem/Albany This chapter of the NACM Credit & Financial Development Division meets the second Tues- day of each month. Meeting Date: Tuesday, April 10, 2007 Location: Red Lion 3301 Market St., Salem Networking Time: 5:30 p.m. Dinner: 6 p.m. Topic: “Benefits of CFDD Topic: “Benefits of CFDD Topic: “Benefits of CFDD Topic: “Benefits of CFDD Topic: “Benefits of CFDD Membership, Installation of Membership, Installation of Membership, Installation of Membership, Installation of Membership, Installation of Officers, and Member Appre- Officers, and Member Appre- Officers, and Member Appre- Officers, and Member Appre- Officers, and Member Appre- ciation Night” ciation Night” ciation Night” ciation Night” ciation Night” Presenter: Jeffrey O'Banion, CCE, CICP, CEW, CFDD National Chairman, Director of Credit, NW Natural Coordinator: Theresa Quillard 503.362.3633 tquillard@airbpaviation.com Eugene/Springfield Eugene/Springfield Eugene/Springfield Eugene/Springfield Eugene/Springfield This chapter of the NACM Credit & Financial Development Division meets the second Wednesday of each month. Meeting Date: Wednesday, April 11, 2007 Location: Downtown Athletic Club Conference Center, 999 Willamette St., Eugene Networking Time: 5:30 p.m. Dinner: 6 p.m. Topic: “The Benefits of Mem- Topic: “The Benefits of Mem- Topic: “The Benefits of Mem- Topic: “The Benefits of Mem- Topic: “The Benefits of Mem- bership in CFDD and Installa- bership in CFDD and Installa- bership in CFDD and Installa- bership in CFDD and Installa- bership in CFDD and Installa- tion of Officers" tion of Officers" tion of Officers" tion of Officers" tion of Officers" Presenter: Jeffrey O'Banion, CCE, CICP, CEW, CFDD National Chairman, Director of Credit, NW Natural Coordinator: Michael Stapleton 541.242.7825 mstapleton@levi.com Portland Portland Portland Portland Portland This chapter of the NACM Credit & Financial Development Division meets the second Thursday of each month. Meeting Date: Thursday, April 12, 2007 Location: Red Lion Convention Center, 1021 NE Grand Ave., 6th Floor, Portland Networking Time: 5:30 p.m. Dinner: 6 p.m. Topic: “Bankruptcy” Topic: “Bankruptcy” Topic: “Bankruptcy” Topic: “Bankruptcy” Topic: “Bankruptcy” Presenter: Keith Nichols, Attorney, Sussman Shank, LLP Coordinator: Marilyn Rea, CBF, Pacific Architectural Wood Prod. 503.284.0024 ext. 18 marilynr@pacificwoodproducts.com

CFDD Chapters CFDD Chapters CFDD Chapters CFDD Chapters CFDD Chapters

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Business Credit Journal Business Credit Journal Business Credit Journal Business Credit Journal Business Credit Journal

7931 NE Halsey, Suite 200 • Portland, Oregon 97213 Tel: 503.257.0802 • Fax: 503.257.0247 www.nacmoregon.org April 2007 20 Recent Case Law Recent Case Law Recent Case Law Recent Case Law Recent Case Law...from cover grants the seller of goods (not services) an administrative expense claim for goods sold to a debtor in the ordinary course of business during the 20 days prior to the bankruptcy

filing. The provision is an alternative to a seller enforcing its

reclamation rights and is not dependent upon the debtor’s

insolvency. This provision effectively takes what had been

low priority pre-petition general unsecured claims under pre- BAPCPA law and elevates them to administrative expense priority claims, which must be satisfied in full prior to distributions being made to lower priority tax and other priority claims and general unsecured creditors. The BAPCPA is silent regarding when a Section 503(b)(9) claim must be paid to the creditor. Two bankruptcy courts have considered the issue of timing of these payments: the bankruptcy court for the Eastern District of Pennsylvania in In re Bookbinders’ Restaurant, Inc. and the bankruptcy court for the District of Delaware in In re Global Home Products,

LLC. Both courts concluded that the timing for disbursement

relating to these claims is left to the discretion of the court. The courts held that in considering when a Section 503(b)(9) administrative expense claim should be paid, courts must analyze, among other things, the prejudice to the debtor, the hardship to the claimant, and the potential detriment to other creditors resulting from payment of the claim. The court in In re Global Home Products, LLC deferred payment of a creditor’s Section 503(b)(9) administrative claim until the effective date of a confirmed chapter 11 plan. Section 503(c), which provides for the allowance of administrative expense claims in connection with employee transactions, was modified by the BAPCPA to restrict a debtor’s ability to award bonuses, make severance payments,

r other payments to “insiders” after a bankruptcy case is
filed. This limitation (and in some cases, prohibition) on

“stay” bonuses, severance payments, and related programs has caused debtors to develop management compensation plans that are tied to performance or sale goals, rather than simply employee retention. The bankruptcy court for the Southern District of New York approved the debtor’s management compensation plan in In re Dana Corp., finding that the plan was primarily incentive based, or otherwise in the

rdinary course of the debtors’ business, notwithstanding that

some aspects of the plan may have an incidental retentive

impact. The court reached this decision after having

previously rejected a management compensation plan as primarily retention based that failed to satisfy the requirements of Section 503(c). Similarly, the Delaware bankruptcy court in In re Nobex Corp. approved a management incentive plan that was tied to the debtor’s goal

f exceeding the sale price for substantially all of its assets

in an amount greater than the amount of the proposed stalking horse bid. Fleshing out a related issue, the bankruptcy court for the Northern District of Ohio, in In re CEP Holdings LLC, considered which of a debtor’s employees are “insiders” for purposes of management incentive plans, finding that such status should be determined, in part, by reference to the employee’s control

f the management plan process and the impact that the

management incentive plan will have on the debtor’s creditors.

Mr. Nathan is a partner in the Bankruptcy,

Financial Reorganization & Creditors’ Rights Group in Lowenstein Sandler PC’s New York City office. He concentrates on all aspects

f creditors’ rights and workouts in

bankruptcy, out-of-court matters and other types of insolvency cases for secured creditors, creditors’ committees, trustees and other creditors. Mr. Nathan can be reached at bnathan@lowenstein.com.

Mr. Cargill is Counsel to the firm’s

Bankruptcy, Financial Reorganization & Creditors’ Rights Group. Mr. Cargill’s practices focuses on representing debtors and creditors in complex bankruptcy

proceedings. Mr. Cargill has advised clients

with specific bankruptcy and insolvency issues including commercial lease issues, financing issues, and employee benefit programs.

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7931 NE Halsey, Suite 200 • Portland, Oregon 97213 Tel: 503.257.0802 • Fax: 503.257.0247 www.nacmoregon.org April 2007 21

Board of Directors Board of Directors Board of Directors Board of Directors Board of Directors Contacts

Chairman Chairman Chairman Chairman Chairman Cheryl Wahlberg, CCE, Food Services of America cheryl_wahlberg@fsafood.com Vice Chair Vice Chair Vice Chair Vice Chair Vice Chair Pat Jones, Consolidated Supply Co. jonpat@consolidatedsupply.com Secretary Secretary Secretary Secretary Secretary Barbara Davis, CCE, Liberty NW Insurance Co., Inc. barbara.davis@libertynorthwest.com Treasurer Treasurer Treasurer Treasurer Treasurer Doug Jacobson, CCE, XPEDX douglas.l.jacobson@ipaper.com Counselor Counselor Counselor Counselor Counselor David Erickson, CCE, Allports Forwarding, Inc. david@allports.com Directors Directors Directors Directors Directors Steven Fancy, CCE/CICP, Pope & Talbot, Inc. steven_fancy@poptal.com Lori Kimball, CBA, Norpac Foods, Inc. kimball@norpac.com Darrell L. Robinson, E C Company darrellr@e-c-co.com Kimi Shelton, CCE, Glacier Northwest, Inc. kshelton@glaciernw.com Raeann Smith, North Pacific Group rsmith@northpacific.com Rick Weisman, CCE, Graybar Electric Co., Inc. rick.weisman@gbe.com Ann Wineland awineland@comcast.net President President President President President Rod Wheeland, CCE, CAE, NACM Oregon rwheeland@nacmoregon.org Customer Service/Credit Reporting Customer Service/Credit Reporting Customer Service/Credit Reporting Customer Service/Credit Reporting Customer Service/Credit Reporting 971.230.1220 services@nacmoregon.org Education Education Education Education Education Jeannie Snow, CBA 971.230.1186 jsnow@nacmoregon.org Industry Groups Industry Groups Industry Groups Industry Groups Industry Groups Kathy Gibson 971.230.1176 kgibson@nacmoregon.org Claudia Sarinana 971.230.1184 csarinana@nacmoregon.org Collection Services Collection Services Collection Services Collection Services Collection Services Denise Redding 971.230.1178 dredding@nacmoregon.org Credentia Staffing Resources Credentia Staffing Resources Credentia Staffing Resources Credentia Staffing Resources Credentia Staffing Resources Karen Mowrey 971.230.1118 kmowrey@credentiastaffing.com Billing Billing Billing Billing Billing Barb Smidt 971.230.1146 bsmidt@nacmoregon.org Meeting Room Rental Meeting Room Rental Meeting Room Rental Meeting Room Rental Meeting Room Rental Lisa Rogstad 971.230.1160 lrogstad@nacmoregon.org