Successful $300K Recovery Amid Ethiopia's Dollar Crisis

A full recovery of approximately USD 300k from an Ethiopian Bank within a month in a scenario where the country is facing serious dollar crisis through a systematic and aggressive approach.

Bank

2021

This case study illustrates a scenario where MNS, acting as a debt recovery agent, successfully recovered outstanding payment of Approx. USD 3Lac dollars from a Ethiopian Bank within a month after the assignment of the claim, despite there was a serious currency crisis and lack of communications between debtor, LC issuing Bank and Intermediary Bank with a systematic and aggressive approach with all the concerned parties involved in the matter. Background:
In early 2021, an exporter shipped a consignment of tyres to an importer based in Ethiopia under a Letter of Credit (LC) arrangement. Despite fulfilling all contractual obligations, the exporter faced significant delays in receiving the payment. For over a year, the exporter persistently followed up with the debtor and made continuous efforts to recover the outstanding payment. Amid Ethiopia's ongoing foreign currency crisis, the matter kept getting more complicated, creating uncertainty around the recovery of the legitimate dues.The situation called for a more strategic and aggressive approach to navigate the institutional bottlenecks and lack of communication among the parties involved.
 

As a first step, MNS initiated a meticulous review of all relevant documents and communications pertaining to the case to ascertain the following critical aspects:
1. If there was any delay from the debtor (due to any reason) in making payment to his bank as the matter was on LC basis. 
2. If there was any discrepancies raised by the debtor/ LC issuing Bank. If so, whether the same was timely responded/resolved by Exporter’s bank.
3. If there was any delay from the LC issuing bank if so, the reason behind that.
4. Immediately fetched a credit report of the debtor company. 

  Contacted/Sent legal demands to all the concerned parties involved in the matter:
 
MNS initiated a very professional and systematic approach and contacted the buyer and banks (LC Issuing Bank & Intermediary Bank) simultaneously as the matter was on LC basis. Outcome of the discussions were as follows:
I) The buyer confirmed that they have already deposited the money equivalent to the LC amount to the LC issuing bank, they are not sure why the bank has still not remitted payment. The buyer did not raise any kind of disputes. 
II) After a several attempt the team reached to the concerned but no response received from them, though demands to them for payment were sent immediately.
III) The team contacted another party involved in the matter I. e intermediary bank and their branch available in LC copy (Malaysia)  informed that they check the current position of the matter and shall get back. Nevertheless, MNS team approached the Indian Branch of Intermediary Bank immediately instead of waiting for Malaysian team to reply and reached to the Indian Branch and shared with them the details of the LC. 
IV) MNS team kept on following up with the debtor/LC issuing bank/ Intermediary Bank simultaneously. Intermediary bank’s branch in India has informed that there were some requirements which are not complied with the Exporter’s bank and requested to have details of concerned in Exporter to have discussion in this respect.
V) We have coordinated with exporter and shared requisite details to the Intermediary Bank, also coordinated with Exporters bank as well , so that the matter is discussed timely and all requirements are complied.
VI) While chasing the intermediary bank, MNS kept pushing the buyer and LC issuing bank. The concerned dept. Of LC issuing bank informed that they are working on it to resolve. After constant follow ups with Buyer, he visited his bank for mount pressure on them and pursuant to which the LC issuing bank assured that they will be remitting the payment shortly.
 

Through persistent efforts, MNS successfully secured full payment for the exporter and received LC instructions from LC issuing bank which they have given to Intermediary bank for reimbursement of claim to Exporter and finally the swift copy for the complete payment obtain from Intermediary bank Indian branch to ensure the remittance process/procedure is completed and Exporter received its legitimate payment.
 
This case study exemplifies the challenges faced by an exporter due to a lack of communication while dealing with an importer/banks in a LC transaction. By engaging in effective communication, providing supporting documentation/ assistance to banks, MNS was able to secure full payment for the delivered Tyre.