Depository Bond — Guarantees Bank Deposits Outside of FDIC Insurance
Section 345B of the bankruptcy code provides for an undertaking to guarantee the deposits in bank accounts outside of FDIC insurance. It’s essentially a depository bond related to bankruptcy, and the guarantee is that the monies will be accounted for and...
Where is Collateral Held?
A common question asked of my office is where is the collateral held. First, let us go through the four types of collateral. 1. Cash Deposit When you are depositing cash, it is wired to the surety company, which holds it pending the resolution of the matter. The cash...
Foreign Entities: Securing a Surety Bond in the U.S.
Foreign companies doing business in the U.S. sometimes need a surety bond for different projects or contracts that they are bidding on. In most countries, they do not use surety bonds. Some countries are beginning to require surety bonds, which are fairly unique to...
Surety Bond vs Letter of Credit
I recently had several situations where a client put up a letter of credit for an obligation that could have used a surety bond instead. A letter of credit is issued by and is the obligation of a bank. Many clients have a relationship with a bank, but not with a...