Tokyo Barrister: Start the law firm bankruptcy

Chapter 848 Adding insult to injury

Shiga suddenly seemed to recall the situation at that time, and his inner resentment and unwillingness surged up again. "We struggled for two or three months. We continued to supply goods to Nippon Steel for free, and finally held on until the day when the steel quality inspection report came out."

"The final test report shows that our products are qualified," said Shiga.

"In that case, shouldn't Nippon Steel pay?" Niwa asked from the side.

Shiga smiled bitterly and shook his head. "At that time, I had the same idea as you. I thought that Nippon Steel should pay the money. But...but I really didn't expect that they would give me something else?!"

"What is it?" Niwa asked immediately.

"It's something called Nippon Steel Debt Class A Certificate," Shiga said. "Nippon Steel said it can be used to offset our payments to raw material suppliers. We small contractors call this thing an A Certificate."

"To put it simply, Nippon Steel has a large scale and cooperates with many upstream suppliers. My suppliers also cooperate with Nippon Steel. We are all in the same system of Nippon Steel. Therefore, when we purchase goods from suppliers in the same system of Nippon Steel, we can use Certificate A to offset our payment obligations."

From Shiga's mouth, an operation that had never been heard of was described.

Niwa was very surprised when she heard this. As someone who has done a lot of financial reporting, she knew that if she did this, wouldn't it completely cut off the cash flow of these contractors? This thing called A certificate cannot be used directly as cash, but can only be used to offset the payment obligations for purchasing goods.

Isn't it too despicable to exempt yourself from the obligation to pay cash by this means!

"You didn't reject this approach?" Niwa asked.

"Of course I raised objections," Shiga said. "This A certificate is not real cash, and it can't be used to pay wages or buy other things. How could we possibly like it? Accepting this A certificate is equivalent to completely tying our company into the Nippon Steel system."

"To use the A certificate, we must purchase raw materials from Nippon Steel's suppliers and then produce steel. The steel produced will most likely be sold to Nippon Steel. In this way, our company will be completely subordinate to Nippon Steel."

"However, Nippon Steel's attitude was very tough and they insisted that we accept the A certificate," Shiga said. "I originally wanted to refuse no matter what. If this continues, the company will collapse."

"At this time, Nippon Steel proposed another condition. That is, if the A certificate has not been used for more than three months, we can take it to the bank cooperating with Nippon Steel to exchange for money. At that time, I really had no choice. After all, we really needed cash. If the relationship with Nippon Steel fell out, it would be very difficult to get our payment back."

"All I thought was, if I could hold on for three more months, or three more months, maybe everything would be fine."

"But what kind of operation is this? Taking this Certificate A to the bank as collateral for money?" Miyakawa asked in confusion.

"Later, when I actually went to the bank to handle it, I learned what the process was like," Shiga said. "For example, this Certificate A clearly states that Nippon Steel owes me 10,000 yen. So the bank will give me at most 8,000 yen in cash. And please note that this is still a loan. In other words, I used Certificate A as collateral to pledge to the bank, and then borrowed the money from the bank."

"And there's interest on this money!" Shiga said. "The conditions we agreed on at the time were that Nippon Steel would guarantee the interest on Certificate A for us. In other words, after we borrowed money from the bank using Certificate A, Nippon Steel would bear the interest for us."

"After that, this operation of Nippon Steel became a daily routine. First, there was a two-month steel quality inspection, and then it was delayed until it could not be delayed any longer. Then they would issue you an A certificate. You had to wait obediently for three months, and then use the A certificate to exchange for cash at the bank." Under Shiga's narration, such an operation mode was revealed.

Everyone was surprised by Rigang's tactics.

This model simply squeezes cash flow to the extreme.

This means that Nippon Steel's payment period can actually be extended to nearly eight months.

Imagine how it would feel if you worked for a company for eight months before getting paid.

"Later, we didn't expect that the problem was the interest on the A certificates," Shiga said. "Originally, it was agreed that Nippon Steel would bear the interest. However, these banks did not pursue Nippon Steel at all, but pursued us. You know, we used a lot of A certificates, and the interest on them was constantly calculated. The debt was growing like a snowball. When the banks really came after us, we found that this was a huge hole that could not be filled."

"So, this is the reason why Nippon Steel's debt to you far exceeds the size of your company?" Kitahara asked.

Shiga nodded.

"Yes. When Certificate A was exchanged for money from the bank, the bank gave us a so-called 'factoring contract' to sign. It stated that if we bear the bank's claims in the future, we can get it back from Nippon Steel. So, Nippon Steel owes us so much."

"Similar situations occur to hundreds of contractors," Shiga further said.

"In a situation like this, our company really can't hold on any longer. We either have to stop production or use the equipment in the workshop to produce our own steel and then resell it. Otherwise, we simply can't hold on."

"It was at this time... at this time..." Shiga's voice was a little tearful, "We encountered the union problem of Nippon Steel again. That day, the union members of Nippon Steel appeared in front of us and said that we had violated their labor rights by bringing in external workers to produce in the Nippon Steel plant."

"I had no idea that this would even attract the attention of the union. At the time, my company was barely able to survive by relying on the steel produced by Nippon Steel's workshops every day. The union asked us to stop production, but we really couldn't do it. So the union members forcibly transported our steel away! We couldn't stop them at all!"

"At that time, I really knelt down and begged the union members. I told them that I used to be a worker in this factory, and that these steels were produced by our own workers and equipment. I asked them not to transport them away. However, they gathered a lot of people and forcibly dragged away our steel for their own use!"

"Really...really...Lawyer Kitahara, my business has been completely crushed!!"

(End of this chapter)