Case Studies

The damaged beauty products

by Rui Fernandes, IA Group

A supplier of beauty products in Southeast Asia sold USD 75.000 worth of merchandise to a Brazilian company. Packaged in 1062 boxes, the shipping went smoothly, and the Brazilian company duly collected the goods.

The manufacturer in Southeast Asia had its export sale insured. As a policyholder, the manufacturer filed a claim for the unpaid invoice with the insurance company, which entrusted IA to investigate the case. As a first step, IA’s team investigated the debtor’s situation.

Initially, IA’s Brazilian legal team gathered information from the buyer, such as phone numbers, office, warehouse locations, business area, and financial assets. With this information, IA approached the buyer by phone. At first, the debtor did not trust IA and refused to cooperate. According to the debtor, IA had no authorization to discuss the company’s debt with the Asian supplier. After explaining IA’s role and IA’s aim to help all parties in the commercial transaction to find an out-of-court settlement, IA persuaded the buyer.

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IA scheduled a virtual meeting with the buyer to discuss the order and its non-payment. The essence of the matter soon became clear: the buyer had forwarded the goods to another company (the final buyer), who experienced quality issues with some of the beauty products sent. As a result, the last buyer refused to pay the buyer, and the buyer did not pay the Asian supplier.

Within several weeks, IA’s team managed to set up a three-party face-to-face meeting in the countryside of São Paulo, where the final buyer’s business was located. IA led this meeting between the debtor’s owner, the Asian manufacturer, and the end buyer to inspect the goods.

During the inspection, 160 of the 1062 shipped boxes had quality issues, as maintained by the end buyer.

The last buyer admitted that 85% of the received goods didn’t have any problems. They were being sold and generating income.

Having ordered a third-party quality report, the final buyer agreed to an amicable solution with IA’s support and persuasion. The supplier and our client - the insurance company – were willing to grant the buyer a USD 10,000 discount due to 160 boxes of damaged goods and good cooperation during IA’s investigations. The final buyer – and in turn, the buyer - decided to pay for the goods received. IA’s legal team drafted a binding ‘debt acknowledgment and repayment agreement’ which summarized the discount provided and the condition to pay the remaining open amount. The deal was fully complied with, and IA could close this case.

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The value of having a local presence, understanding the debtor, initiating meetings with all parties, negotiating, and effectively communicating with all involved came together in IA’s approach to solve the case. Our team successfully handled this issue out-of-court in less than a year since receipt, thereby avoiding expensive legal proceedings.