Krahl Construction: Lender and Surety Lawsuits
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The latest Krahl Construction developments: Fifth Third Bank and Travelers Casualty and Surety Company of America each sued Krahl Construction's President in federal court last week.
Fifth Third Bank had loaned money to Krahl before Krahl closed for business earlier this month. Fifth Third's Complaint (PDF) alleges that Krahl's President personally guaranteed repayment of the loan but hasn't paid as required under the guaranty.
Travelers served as Krahl's surety providing payment and performance bonds on many of Krahl's projects. With Krahl's closing and assigning their assets for the benefit of creditors, odds are some owners are going make claims under the performance bonds and some subcontractors are going to make claims under the payment bonds. Travelers's Complaint (PDF) alleges that under an indemnity agreement between Krahl's President and Travelers, the President must reimburse Travelers for money that Travelers pays out to owners and subcontractors under the bonds. Travelers claims that Krahl's President hasn't paid.
And to try an ensure that Krahl's President's assets are available to pay future liability under the indemnity agreement, Travelers also asks the judge to enjoin the President from transferring, or encumbering, any of his money or other assets.
Construction Law Today is a legal blog about construction contracts, disputes, finance, and the people whose job it is to deal with them.
