What are your personal obligations?
The demise of Truland Group, an electrical contractor on the east coast, raises an interesting question as to the extent of an owner’s personal liability to the bonding company. As has been revealed in the litigation surrounding Truland’s fall from grace, it is far from clear which of the owner’s assets may be seized to reimburse the bonding company for payments on projects.
The fight between Truland and its surety company, XL Specialty Insurance Company, began about eight months ago after a problem was discovered with Truland’s work on a federal data center in Utah. In the following months, Truland filed for bankruptcy under Chapter 7, which calls for a liquidation of the company’s assets to satisfy creditors.
In addition to Truland’s bankruptcy, XL Specialty Insurance Company filed its own litigation, seeking access to Truland’s owner’s retirement accounts and other personal assets. Interestingly, the owner’s $1.2 million home was off limits because it was specifically carved out of the collateral to which the bonding company could seize.
While Truland’s demise is on a much greater scale than most, it does raise a question as to which personal assets business owners have pledged to support their bonding limits.
Take Away: How long has it been since you have reviewed your personal obligations to your bonding company? Perhaps it’s time for a look.
Authored by Craig Martin, Lamson, Dugan & Murray, LLP.
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