Surety Bond Quarterly - Summer 2014 - 31

Moderator Armen Shahinian of Wolff & Samson PC.

unable to successfully restructure and
refinance the company's debt. In this
case the parties were able to avoid
problems because, with the assistance of the bond producer, the sureties got the attention of the debtor/
principal's management before the
bankruptcy filing and negotiated
first-day orders that protected the
sureties, as continued surety credit
post-petition was essential to the
debtor's reorganization efforts.
Most successful reorganizations
in which the surety is able to avoid
loss are reorganizations in which
the reason for the bankruptcy filing is not that the debtor entity is
incapable of operating a business
successfully. Rather, they involve
situations in which the debtor is
able to operate at a profit but for
its debt load, which it is incapable
of servicing and sustaining. Where
there is a viable underlying business
that is capable of operating at a profit
with a different capital structure, a
Bankruptcy Code section 363 sale
of the debtor's assets as an operating company will generally provide
the best opportunity for at least the
secured creditors to receive some
distribution in excess of what would
be received in a liquidation. Under

these circumstances, it is important
to allow for continued operations,
which will often require maintenance
of surety credit. The result is that all
of the creditors that might benefit
from a successful reorganization,
as well as debtor's management,
have an interest in the maintenance
of surety credit and understand
its importance to the ability of the
debtor to reorganize. Under those
circumstances, protections available to lenders in bankruptcy, such
as administrative expense status
and, potentially, collateralization,
may be made available to the surety.
If administrative expense status is
achieved, the surety will be assured

of no loss if the debtor is able to successfully reorganize and confirm a
plan of reorganization, because confirmation of a plan of reorganization
requires payment of administrative
expense claims, such as that possessed by the surety under a typical
surety program order.
The surety bond producer can play
an important role in helping sureties
avoid a loss and assisting debtor/
principals to maintain surety credit
and, potentially, to successfully
reorganize. The Synagro case study
serves as a model for bond producers
and sureties on commercial accounts
that are seeking financial restructuring. The surety bond producer was
effective in getting the attention
of the debtor's management well
before the bankruptcy filing so that
the debtor could successfully operate with surety credit post-petition
and the sureties could put that surety
credit in place with protections that
resulted in no loss to the sureties
with respect to both their pre- and
post-petition exposures.
‚óŹ
Armen Shahinian is a surety and
construction attorney and member
of Wolff & Samson PC practicing
in West Orange, NJ and New York,
NY. He is a past Chair of the ABA
Fidelity & Surety Law Committee,
a member or the Board of Directors
of the Surety Claims Institute and
an Advisor to the Surety Claims
Advisory Committee of the Surety &
Fidelity Association of America. He
can be reached at 973-530-2002 or
ashahinian@wolffsamson.com.

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Surety Bond Quarterly - Summer 2014

Table of Contents for the Digital Edition of Surety Bond Quarterly - Summer 2014

NASBP Upcoming Meetings and Workshops
2014-2015 NASBP Executive Committee
From the CEO: We have a great story so let's tell it!
Practical Insights: What You Need to Know - Cost charging in government contracts can result in common, but avoidable pitfalls
Strength in numbers: Harness the power of networking
Profile: President Thomas M. Padilla
Proving your worth: Surety bond producers provide value to clients and beneficiaries
NASBP Fall Workshops
Contract surety claims: The promise - Pact or fiction
Commercial surety claims: A case study on the bond producer's role in assisting a client to avoid loss and maintain surety credit through bankruptcy
Develop the techniques necessary to be an effective policy advocate
NASBP Annual Meeting focuses on the importance of mentoring and critical industry information
Index to Advertisers
Surety Bond Quarterly - Summer 2014 - cover1
Surety Bond Quarterly - Summer 2014 - cover2
Surety Bond Quarterly - Summer 2014 - 3
Surety Bond Quarterly - Summer 2014 - 4
Surety Bond Quarterly - Summer 2014 - 5
Surety Bond Quarterly - Summer 2014 - 6
Surety Bond Quarterly - Summer 2014 - 2014-2015 NASBP Executive Committee
Surety Bond Quarterly - Summer 2014 - From the CEO: We have a great story so let's tell it!
Surety Bond Quarterly - Summer 2014 - 9
Surety Bond Quarterly - Summer 2014 - Practical Insights: What You Need to Know - Cost charging in government contracts can result in common, but avoidable pitfalls
Surety Bond Quarterly - Summer 2014 - 11
Surety Bond Quarterly - Summer 2014 - Strength in numbers: Harness the power of networking
Surety Bond Quarterly - Summer 2014 - 13
Surety Bond Quarterly - Summer 2014 - 14
Surety Bond Quarterly - Summer 2014 - 15
Surety Bond Quarterly - Summer 2014 - Profile: President Thomas M. Padilla
Surety Bond Quarterly - Summer 2014 - 17
Surety Bond Quarterly - Summer 2014 - 18
Surety Bond Quarterly - Summer 2014 - 19
Surety Bond Quarterly - Summer 2014 - Proving your worth: Surety bond producers provide value to clients and beneficiaries
Surety Bond Quarterly - Summer 2014 - 21
Surety Bond Quarterly - Summer 2014 - 22
Surety Bond Quarterly - Summer 2014 - 23
Surety Bond Quarterly - Summer 2014 - NASBP Fall Workshops
Surety Bond Quarterly - Summer 2014 - 25
Surety Bond Quarterly - Summer 2014 - Contract surety claims: The promise - Pact or fiction
Surety Bond Quarterly - Summer 2014 - 27
Surety Bond Quarterly - Summer 2014 - 28
Surety Bond Quarterly - Summer 2014 - Commercial surety claims: A case study on the bond producer's role in assisting a client to avoid loss and maintain surety credit through bankruptcy
Surety Bond Quarterly - Summer 2014 - 30
Surety Bond Quarterly - Summer 2014 - 31
Surety Bond Quarterly - Summer 2014 - Develop the techniques necessary to be an effective policy advocate
Surety Bond Quarterly - Summer 2014 - 33
Surety Bond Quarterly - Summer 2014 - NASBP Annual Meeting focuses on the importance of mentoring and critical industry information
Surety Bond Quarterly - Summer 2014 - 35
Surety Bond Quarterly - Summer 2014 - 36
Surety Bond Quarterly - Summer 2014 - 37
Surety Bond Quarterly - Summer 2014 - Index to Advertisers
Surety Bond Quarterly - Summer 2014 - cover3
Surety Bond Quarterly - Summer 2014 - cover4
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