Construction Law Today : Construction Lawyer & Attorney : Joshua Glazov : Design Build Contracts, Construction Bankruptcy

We've talked about statues of repose and how they affect construction projects in the past.  Well Melissa Dewey Brumback at Construction Law in North Carolina just published a superlative statute of repose piece: Statute of Repose: Putting your Risk to Bed.  I like Melissa's work so much, especially how she compares a statute of repose to a statute of limitation, that I have to mention it here and urge you to read it too.  Enjoy!

 Photo: The Repose by Aleksandra Nowak 2008

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Welcome to the first in a three-part series on surety bonds in Illinois compliments of guest author Danielle Rodabaugh. Danielle is a principal for SuretyBonds.com and will be discussing the three basic types of construction bonds:

• Bid bonds
• Performance bonds
• Payment bonds

Today we're starting with bid bonds.

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For the first time since Madonna still had an American accent and Jerry Jones last owned a Super Bowl contender, the FDIC is suing former officers and directors of a failed bank seeking damages for pre-failure mismanagement.  Odds are this won't be the last; process servers will be busy knocking on more doors.  

The FDIC's complaint (PDF) focuses on former officers and directors in IndyMac's Homebuilder Division alleging that the President and CEO, and two successive Chief Lending Officers, breached their respective fiduciary duties of care to the bank by approving loans they shouldn't have approved. The FDIC asks for damages from four individual defendants.  Specifically, the FDIC alleges that IndyMac Homebuilder Division executives:

• Repeatedly disregarded credit policies and approved loans to borrowers who were not creditworthy and/or for projects that provided insufficient collateral
   
• Pushed for growth in loan production volume with little regard for credit quality
   
• Continued to follow a strategy for growth at the tail-end of the longest appreciating real estate market in over four decades despite awareness that a significant downturn in the market was imminent and despite warnings from IndyMac’s upper management about the likelihood of a market decline
   
• Unwisely continued operations in homebuilder lending in deteriorating markets even after becoming aware of the market decline

Hat tips to Peter Christensen at the Appraiser Law blog and Kevin LaCroix at the D&O Diary for their pieces and announcing this lawsuit and providing their analysis.

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Unions representing construction workers around Chicago are on strike.  Union representatives from the Chicago Laborers' District Council and the Union of Operating Engineers Local 150 met yesterday with representatives of the Mid-America Regional Bargaining Association negotiating on behalf of construction companies.  The deadlock continued today as negotiators did not reach an agreement to end the strike.  They plan to meet again on Friday and resume efforts to end the strike.

Meanwhile numerous projects stand idle, from public projects like work on the Eisenhower Expressway to school renovations in Naperville and office renovations and build-outs downtown.

So how does the strike affect project participants like contractors, owners, material suppliers, architects, and engineers?

• Do completion and delivery dates get postponed? 
   
• Do delay damages get triggered?
   
• Do liquidated damages pile up? 
   
• Who pays for the costs for protecting and  preserving work in progress while work is suspended, additional jobsite overhead cost, and re-mobilization costs?

It all depends on the what the contract for each affected project says. 

What do your contracts say about strikes:

• How a strike affects schedules and completion dates?
   
• Who pays additional costs?
   
• Is there delay damage exposure? 

Have you recently considered these things and other strike related concerns?  Are your contracts prepared to provide the kinds of answers you'd hope they provide?      

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Loss-Sharing Agreements are one of the principal features when the FDIC takes over a failed bank.  Loss-Sharing Agreements have an air of mystery about them, something almost approaching a contemporary urban legend in the public consciousness.  To dispel some of the confusion surrounding Loss-Sharing Agreements, the FDIC explains how they work in multiple media, including videos and print articles.   Scroll down for two of the most helpful examples....

Loss-Sharing Video

The FDIC produced this video about Loss-Sharing Agreements for the general public: 

Loss-Sharing Articles

More technical are articles like the recently published FDIC Loss-Sharing Agreement: A Primer (PDF) in the FDIC's newsletter Supervisory Insights.  Though the target audience is banking regulators and examiners, it's invaluable also for anyone interested in the nuts and bolts of how a Loss-Sharing Agreement works, including accountants, financial advisers, and consultants who advise banks on buying assets from failed bank receiverships and managing them under a Loss-Sharing Agreement.

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