performance bond default

[gpartin]

I have a client that has a construction business. there was recently an accident and now the company is in financial trouble and she is considering not paying her supplier and letting the bonding company pay this. she has a performance bond. If this is done I felt it would hurt her down the road should she ever need to bond again and hurt her credit, she claims it will just be a claim and will not hurt her in anyway. Can you clarify what the results of such a claim can do to the owner of a company. thank you.

[Surety Queen]

Originally Posted by gpartin

I have a client that has a construction business. there was recently an accident and now the company is in financial trouble and she is considering not paying her supplier and letting the bonding company pay this. she has a performance bond. If this is done I felt it would hurt her down the road should she ever need to bond again and hurt her credit, she claims it will just be a claim and will not hurt her in anyway. Can you clarify what the results of such a claim can do to the owner of a company. thank you.

First of all, your client needs to understand that IF the Surety steps in and pays the suppliers, they will most definitely come back to your client to recoup any damages. She needs to read the Indemnity Agreement that she signed that she agreed to this process in the event of a claim.

It will most definitely hurt her for future bonding abilities.

She really needs to be in touch with her bonding agent to make sure she doesn't shoot herself in the foot!