Surety’s bonded principal, a civil utility contractor located in North Texas, started having signs of financial instability in February 2021. The principal had 16 bonded projects totaling approximately $9MM in billable work with only $2.5MM complete. VERTEX was asked to perform a Forensic Books and Records Review, and site visits to each of the project sites from March through June of 2022.
The Principal filed for Chapter 11 Bankruptcy in July, 2022. VERTEX assisted the Surety and outside counsel argue for freezing funds of the bonded projects immediately and was able to provide to the Court evidence that the Principal provided inaccurate documentation for overhead and salaries. This allowed the judge to rule in favor of the Surety for their MSJ to direct all Obligees to send all contract proceeds to Surety, rather than allowing Principal to secure contract funds. VERTEX proceeded to assist Surety with relets and tender agreements for ten of the remaining open projects.
