Jason and Panther would pay a fee for each card issued, or, if they sold the receivables to the bank, take a cut of the profits for collecting from the debtors.
When Enron's bills were paid, the three entities reinvested the cash in short-term commercial paper issued by Enron and an affiliate, the lawsuit said, until there were more receivables to buy.
A special purpose entity, Sequoia Financial Assets, allegedly bought accounts receivables from Enron and reinvested the money collected on the bills in short-term paper issued by Enron and its Enron North America unit, the suit said.
National Century has been under fire as Moody's Investors Service has cut by 12 levels its rating on securities issued by the company since Oct. 25 and has said the company wrongly tapped into funds intended to protect bondholders and used them to buy more receivables.
Sunbeam's 1997 10K, issued two weeks before the sale of the debentures, shows that in December 1997 Sunbeam sold $60 million in accounts receivable to raise cash.
For credit card debt offerings Barclays in March joined forces with Chase to issue $1.2 billion of securities backed by American Express receivables.
The securities are rated AAA because the issuing bank will absorb defaults on the pool of receivables.
Moran said the company plans to use its new funding to develop an accounts receivable feature for vendors from large food service distributors to small local farms — that will automatically issue invoices, track them and bill customers through the app.
A bank on the receiving end of mortgage repayments or credit-card receivables can do something similar: bundle the loans up and sell them, or use them as collateral to get funding, which it can then use to issue more loans.
With the launch of CircleUp Credit Advisors, it has begun issuing loans ranging in size from $25,000 to $600,000 to help businesses fund future purchase orders, increase inventory and smooth out cash flow while waiting on late accounts receivable payments.
