Cathouse. New 'owner' screwed?

[BelgianBoy]

suadum,

 

Complex matters here and yes, threat totally derailed.

A couple little points here.....

1. you depend on the customers' goodwill : sure you do, but I dont. If I dont deliver according to contract, then 3rd party inspection is built in, loser pays charges....

2. why dont you do part-payment contracts then, arrival of machine gets ya 25 %, first week of installation gets you another cut, balance after operational signoff ?

3. irrevocable only gets you as long as the l/c is valid, after that if no payment, money remains his.

4. going to court is really a very last resort, I prefer a bad settlement out of court than a good ruling in court.

 

BB

[Old Hippie]

"...To know BH is to hate him! Why hasn't someone taken him out yet? I believe there is a line of people that extends to Phuket waiting their turn..."

 

I asked this before. Not sure. I've seen him fuck with people, kick over motor bikes, fuck with the hamburger guy etc...he just asks for trouble... I do think a few people did have to "talk and explain" a few things to him, but I haven't heard that he was ever given a serious enough beating to straighten him out...my guess is, he'll get filled in sooner or later.

[..]

Well, it all works for me -- have done several hundred over the years and had only one problem.

 

Re #1: it is there, but I have never had to use it.

 

Re#2: I have done that in the past, but usually the customer prefers to pay upfront (my repeat customers do this) or the LC option.

 

Re #3 On the LCs that I get I have never seen an expiry date tho'. Maybe a different one or I am not observant. My banker deals with the mechanics of that stuff so I am only partially in the loop.

 

Re #4 Agreed. But I like to be sure I would be the winner if it comes to that so I have a very thorough documentation trail on all deals (as any good biz man would).

 

Cheers,

SD

[chuckwoww]

Welcome to the board. Cool board name.

[Guest]

A few points here on security, letters or credit and bank guarantees?.

 

First, Suadum is fundamentally right on how business is generally conducted here even if his description of a letter of credit is not exactly correct. There is nothing even remotely similar to a UCC-1 (lien against personal property) or fixed and floating charges in Thailand. For smaller transactions, it is cash or a letter of credit. For larger transactions, machinery (industrial machinery not PCs and bar stools) and property can be mortgaged, but it takes year here to foreclose on a mortgage and you have to go through the courts to do so. Hence, we discount their value. About the best form of security here is a share pledge, because you can enforce that outside of the courts, which move at a snail?s pace when it comes to enforcing a creditors? rights. If all the shares are pledged, and the borrower defaults, you can acquire the company at an auction that can be held in about a month. But that doesn?t mean that the company won?t be an empty shell by the time you execute the pledge. If all the company?s assets have disappeared, sometimes you have to go to the police, its gets messy and you?re still going to take a bit hit. (By ?you?, I mean the bank.)

 

Second, a letter of credit (L/C) is a document which requires a bank to pay the beneficiary of the L/C if the conditions specified in the L/C are met. Sometimes the conditions specified in the L/C are as simple as a demand by the beneficiary, but usually they involve the presentation of shipping documents proving the container has arrived or been shipped. (It generally doesn't matter if the container is full of rocks rather than computer chips - the bank still has to pay, but the buyer can still sue the seller in a separate lawsuit (good luck)). L/Cs have been around for hundreds of years, and they are particularly useful in international transactions. Essentially the credit of the bank is substituted for the credit of the buyer. (In that sense, it is not an escrow, although outsiders sometimes get confused because a bank will often require collateral or cash to back up the L/C. But this has nothing to do with the bank's obligation to pay on the L/C; the collateral is there so that it can recover when it pays on the L/C.) The conditions can vary tremendously, but if the conditions specified in the L/C are met, banks are required to, and in practice almost always will, pay. If they don?t pay when they are supposed to, the damage to their reputation will far exceed the amount at issue in the L/C. Even banks here understand that, although they are not quite reliable as US and European banks.

 

Third, bank guarantees, which some call letters of guarantee, are like any other guarantee, except they are issued by a bank rather an ordinarily business or individual. The big problem is that guarantees everywhere are subject to a range of legitimate defenses. For example, if you give the underlying debtor an additional month to pay a debt without either getting the guarantor?s consent or giving notice, you can nullify the guarantee. (The reason: you have increased the risk to the guarantor, who has recourse against the debtor if he defaults.) I didn?t see bank guarantees that much in the U.S., but they are more common here. Usually a bank will not issue a guarantee on behalf of a party unless they absolutely trust that party (or, in the case of local banks here, he has ?connections? with the bank) or the party provides security (sometimes cash, which makes we wonder why anyone would use a bank guarantee in the first place) to the bank to back up the guarantee.

 

I am probably a bit prejudiced here because of my job, but I am convinced that the absence of an effective legal framework for taking and enforcing security and generally enforcing creditor?s rights holds back economic development in Thailand tremendously.

 

Boy, we really are digressing from the Cathouse transaction...

[..]

"Boy, we really are digressing from the Cathouse transaction... "

 

Ya, but at least we know what we are talking about here and it is interesting (at least to you, BB, and I, LOL).

 

Cheers,

SD

[STFORME]

Have used it for long time on another board. Think I'll change it for here so "things don't get out of hand."

[BelgianBoy]

Gadfly1 said:

A few points here on security, letters or credit and bank guarantees?.

 

../ snip /..

 

Boy, we really are digressing from the Cathouse transaction...

Gaddie,

 

Yes, you are totally right with all the added info given.

I too have done and still do business selling in Thailand and all other major countries in the region based on 3 forms of payment : advance payment, part advance payment (of at least 35 %) and balance on CAD, or l/c.

 

Just a last point for extra protection : *any* l/c received, from whatever bank it may come, *must* always be confirmed by my bank(s) here in Belgium, otherwise not a single kg will be shipped.

Even though Viet banks imply payments at their counters, my banks adds a silent confirmation.

 

L/c's are a fun hobby of mine, I just received one of 9 full A4 pages from Kuwait it takes over an hour to digest

 

So, where is TC when we need his POV on this thread ?

 

BB

[chuckwoww]

Chuck_Wow said:

Have used it for long time on another board. Think I'll change it for here so "things don't get out of hand."

 

Thanks. Anything to do with cigars?

[shygye]

[color:"green"] Bottom line is: TC is a good guy and would never intentionaly screw anyone on a business deal. [/color]

 

Well, TC did NOT return the buyers money when he COULD NOT TRANSFER the sublease. Is that what a "good guy" does in the LOS?