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Recovery: Trends, Tips, Tools Presented to The Philadelphia Surety Claims Association

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

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  1. Recovery: Trends, Tips, ToolsPresented to The Philadelphia Surety Claims Association Todd Kazlow President

  2. 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

  3. 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

  4. 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

  5. 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”

  6. 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

  7. 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

  8. 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

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

  10. PERSISTENT, PROFESSIONAL PURSUIT

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