Supplier Standstill Agreement Strategy

A potential strategy for addressing financial difficulties within a company is the implementation of a "Supplier Standstill Agreement." This approach involves negotiating with the company's key suppliers to establish a temporary *-day pause on collections in exchange for partial payment and a secured note. The agreement is based on the principle of good faith, as articulated in the case of Bhasin v. Hrynew, * SCC *, and further acknowledged in Third Eye Capital v. Ressources Dianor, * ONSC *. By adopting this contractual arrangement, the company can potentially avoid formal insolvency proceedings, as it mirrors the benefits of a Companies' Creditors Arrangement Act (CCAA) stay without the need for court intervention. The primary objective of this agreement is to provide the company with operational breathing room, ensure the continuity of essential supply chains, and alleviate the pressure from creditors. This proactive measure could serve as a viable alternative to more drastic legal actions, allowing the company to stabilize its financial situation while maintaining relationships with its suppliers. Are you seeking general guidance on this agreement or assistance with drafting legal documentation and negotiations?

It seems like you're dealing with complex financial and legal issues related to customer agreements and supplier arrangements. You might want to consult with a legal expert or financial advisor who can assist with drafting agreements and ensuring compliance with the Uniform Commercial Code and other relevant laws.
- Are you looking for general advice on enforcing payment obligations or assistance with specific legal documentation?

In addressing the company's financial challenges, one viable strategy is to implement a "Supplier Standstill Agreement." This involves negotiating with key suppliers to establish a temporary *-day halt on collections, in exchange for partial payment and a secured note. This agreement is rooted in the principle of good faith, as highlighted in Bhasin v. Hrynew, * SCC *, and recognized in Third Eye Capital v. Ressources Dianor, * ONSC *. The aim is to circumvent formal insolvency proceedings, effectively achieving the benefits of a Companies' Creditors Arrangement Act (CCAA) stay without court intervention. This agreement provides the company with operational breathing room, maintains critical supply chains, and reduces creditor pressure. It serves as an alternative to drastic legal actions, enabling financial stabilization while preserving supplier relationships. Additionally, the company should audit customer agreements to ensure compliance with payment obligations under Uniform Commercial Code § *-*, where payment defaults to being due at delivery unless otherwise agreed. For customers with */* net * terms, timely payment enforcement is crucial, along with formal demands for non-compliance. This enforcement accelerates cash inflows, reduces Days Sales Outstanding, and maintains liquidity, all in compliance with established law. Seeking general guidance or assistance with legal documentation and negotiations can further support these efforts.