7. Factored Accounts and Receivables

A&R Factoring Agreement

In January 2016, in connection with the RG Merger, the Company entered into the amended and restated deferred purchase factoring agreement with CIT, through its subsidiaries, Robert Graham Designs LLC and Hudson (the “A&R Factoring Agreement”), which replaced all prior agreements relating to factoring and inventory security. The A&R Factoring Agreement provides that the Company sell and assign to CIT certain accounts receivable, including accounts arising from or related to sales of inventory and the rendition of services. Under the A&R Factoring Agreement, the Company pays a factoring rate of (i) 0.20 percent for certain major department store accounts, (ii) 0.40 percent for all other accounts for which CIT bears the credit risk, subject to discretionary surcharges and (iii) 0.35 percent for accounts for which the Company bears the credit risk, but in no event less than $3.50 per invoice. The A&R Factoring Agreement may be terminated by CIT upon 60 days’ written notice or immediately upon the occurrence of an event of default as defined in the agreement. The A&R Factoring Agreement may be terminated by the Company upon 60 days’ written notice prior to December 31, 2020 or annually with 60 days’ written notice prior to December 31 of each year thereafter.

Prior to the RG Merger, the Company was also party to a deferred purchase factoring arrangement with CIT, which was terminated in connection with the RG Merger. See “Note 12 – Debt and Preferred Stock” below for further discussion of this and other RG debt arrangements prior to the RG Merger.

Factored and accounts receivables consisted of the following (in thousands):


	December 31, 2016		December 31, 2015
Non-recourse receivables assigned to factor	$	20,226	$	5,655
Client recourse receivables		1,634		637
Total receivables assigned to factor		21,860		6,292

Allowance for customer credits		(5,157)		(1,375)
Factor accounts receivable, net of allowance	$	16,703	$	4,917

Non-factored accounts receivable	$	4,339	$	2,193
Allowance for customer credits		(1,031)		(268)
Allowance for doubtful accounts		(190)		(89)
Accounts receivable, net of allowance	$	3,118	$	1,836

Total factored and accounts receivable, net	$	19,821	$	6,753

Of the total amount of receivables sold by us as of December 31, 2016 and 2015, we hold the risk of payment of $1.6 million and $0.6 million, respectively, in the event of non‑payment by the customers.