3JM Company Inc.

Published Articles by David Balovich

Published in: Creditworthy News
Date: 7/5/00

We often speak of and encourage our readers to be on the lookout for
impending problems by the warning signs that are constantly floating around us. These can be directly related to what we are doing or indirectly related. One of these warning signs recently caught our attention while browsing through the classified help wanted ads one particular Sunday morning. Wanted: Prestigious law firm located in Dallas with offices in Austin, San Antonio and Washington, DC is seeking qualified individuals for our bankruptcy section. The following morning while browsing through the monthly state bar journal we again noticed several firms seeking individuals to staff the bankruptcy sections of their firms.

Our curiosity tweaked, we placed a call to a former law school professor to inquire about the sudden recruitment of attorneys for bankruptcy positions. She told us that bankruptcy lawyers are in relatively short supply due to the economy of the 90's being so strong. Law school students in the past ten years have not perceived bankruptcy law as a hot specialty and that on average very few attorneys with less then seven years of experience do any bankruptcy law.

However, law firms are gearing up because they believe there will be a surge of dot.com bankruptcies as investors begin to turn away from these start up companies as they continue to report losses rather than earnings.

The market is showing that investor money is drying up for dot.com companies and without the continued investment those companies will fail.

Now is the time to reevaluate our receivable portfolios to determine if we are doing business with these companies or firms that have these companies as customers. Are our credit lines justified? Is the balance owed in proportion to the credit line assigned? What is our chance of recovery if a bankruptcy occurs?

These are the reasons for paying attention to warning signs wherever they may be found. Bad debts do not just happen, they are generally influenced by outside factors.

I wish you well.

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