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Recovery: Trends, Tips, Tools Presented to The Philadelphia Surety Claims Association. Todd Kazlow President. Trends. Surety recovery down 20-30% nationwide Bankruptcy filings at record pace Increase in Chapter 13 filings Increase in commercial surety claims started in early 2009

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recovery trends tips tools presented to the philadelphia surety claims association

Recovery: Trends, Tips, ToolsPresented to The Philadelphia Surety Claims Association

Todd Kazlow

President

trends
Trends
  • Surety recovery down 20-30% nationwide
  • Bankruptcy filings at record pace
  • Increase in Chapter 13 filings
  • Increase in commercial surety claims started in early 2009
  • Contract surety? Last Phila Surety Claim meeting discussed lag and potential
real estate
Real Estate
  • Half of 109 economists polled last month by MacroMarkets LLC expect home prices to bottom out next year (2011) and half don’t expect the rebound until 2012
  • 19 of 28 major metropolitan areas had increasing unsold home inventories in the 3rd quarter of 2010
  • 10.7 months to sell current inventory; 6-8 months is considered healthy
slide4
Tips
  • Start Early; at time of claim
  • Do your homework. What is the financial position of the indemnitors/debtors? What are you chasing and what do you hope to gain realistically?
  • Cost/benefit analysis:
    • Counsel does not surety to unnecessarily spend money where results are tenuous
tips cont
Tips, cont.
  • Pursuit of indemnitors/debtors may not always involve pure cost/benefit analysis and may involve “business” reasons for pursuit
  • Having your “eyes wide open” about finances of indemnitors, be willing to compromise early
  • Don’t be, as George Bachrach phrased it in the Bond Default Manual, “seduced by the collateral”
tips cont1
Tips, cont.
  • Bank accounts are hard to find and not a pot of gold
  • Consider instead, obtaining a judgment and doing a “shot gun” bank garnishment
  • Employment searches are not easy but finding employment is very helpful and a great tool
  • Know the real estate market where the property is located
tips cont2
Tips, cont.
  • Be willing to structure deals with payment plans with a view to revisit the status of the debtors at a later date
  • Consider creative fee arrangements with counsel, vendors, etc.
    • Contingency
    • Blended
    • Fixed fee
tools
Tools
  • Internet research
  • Data bases
    • Public
    • Private/subscription

Real Property ownership and transfers

Credit Reports

Judgments, liens

Litigation

Bankruptcy

UCC searches

Financial relationships

Other company ownerships

summary
Summary
  • Tough recovery conditions
  • Due diligence
  • Once committed, be focused
  • Continuous cost/benefit analysis
  • Realistic and managed expectations