When a critical supplier is considering Chapter 11 Bankruptcy and still owes your company $35M, it leads to some sleepless nights.\u00a0 David Traub, International Joint Ventures, Partnerships and Strategic Alliances expert; inherited just such a situation when his company appointed him Head of Precious Metals Trading for the Americas.<\/p>\n

He discovered that not only was one of the company\u2019s trading counterparties, who was both a customer and supplier, was having liquidity problems, risk limits were being ignored, due to a fraudulent situation which the manager of the company had committed with another counterparty.\u00a0 As a result,<\/strong> the counterparty vendor was contemplating entering Chapter 11 Bankruptcy.<\/p>\n

Traub said, \u201cI needed to understand the following; (1) breakdown of our net $35 million exposure which consisted of PGM collateral, located at several third-party locations, as some metals are more liquid than others, and at that time the PGM market was very volatile, (2) Facts, legal opinions, and judgements to date regarding the fraudulent activities, (3) Timeline of situation and when they expected to enter Chapter 11 Bankruptcy proceedings, and (4) Credit insurance coverage, Traub said.\u201d<\/p>\n

Once he had a grasp of the totality of the situation, he spoke with the counterparty\u2019s owners, senior managers, and attorneys for all parties in both Germany and the USA to understand their position and determine the best way to work toward winding down the $35 million exposure, before they entered Chapter 11.<\/p>\n

When asked how he approached solving the problem he said, \u201cI developed a plan to wind-down exposure over the course of approximately two months including set exposure level goals over the same period, got it approved by our executive committee, and obtained agreement for the plan from our counterparty.<\/p>\n

The situation David inherited was created by failure to adhere to agreed-upon counterparty risk limits, a lack of defined responsibility, accountability, and poor initiative by team members. His plan fully corrected the current problems and prevented possible future occurrences.\u00a0 As he said to this interviewer, \u201cOver the two-month period I was able to wind down their exposure from $35 million to $0, generate a net trading profit of $2 million, and lay-off future risk.\u00a0 I was glad that it ended in a win-win situation to the mutual benefit of all involved parties.\u201d<\/p>\n

Watch full video interview below.<\/strong><\/h4>\n

\n