Why would a CEO sign something saying he'll be personally be responsible in Bankruptcy?

http://www.bizjournals.com/baltimore/news/2015/03/06/federal-judge-rules-against-truland-group-ceo.html

Truland Inc was a multi-million dollar company.

Mr Truland (CEO) personally backed the surety bonds.

"XL Specialty (surety company) claimed Robert Truland and his wife, Mary, were financially responsible because the couple signed a July 2011 agreement indemnifying them against financial harm if it had to pay out claims on Trulands' behalf."

Claims exceed $35M.


Why would a CEO sign such a thing?!

A c-level employee would not do such a thing 'intentionally' or 'without option'. The Trulands failed to disclose certain prior-existing covenants. THAT is the Judge's reasoning to barring the countersuit. But the Trulands argued unsuccessfully that over $40 millioin could be gathered from the existing covenants. Naturally, such collection would exclude the Trulands from 'personal' financial responsibility.

So there we are, right where we're at.

It's easy to imagine, considering the name of the company, that the Trulands considered themselves the owners of the company, and he wound up as "CEO" in some incorporating move. Not your usual CEO.

Once somebody starts and builds a business, it becomes his "baby" and more often than not will be willing to experience financial ruin to try to keep if from going out of business.

Quote:

XL Specialty (surety company) claimed Robert Truland and his wife, Mary, were financially responsible because the couple signed a July 2011 agreement indemnifying them against financial harm if it had to pay out claims on Trulands' behalf.

This is the part I don't quite get. Should the sentence be changed like this?

"XL Specialty (surety company) claimed Robert Truland and his wife, Mary, were financially responsible because in spite of the fact that the couple signed a July 2011 agreement indemnifying them against financial harm if it had to pay out claims on Trulands' behalf."

From that article it's hard to discern facts but I think it's an aggressive judge who, for what ever reason, wants this to go to trial. And it's going with that kind of money at stake. Meanwhile, the bond holders will sit for years waiting for some sort of payout.

Quote: odiousgambit

This is the part I don't quite get. Should the sentence be changed like this?

"XL Specialty (surety company) claimed Robert Truland and his wife, Mary, were financially responsible because in spite of the fact that the couple signed a July 2011 agreement indemnifying them against financial harm if it had to pay out claims on Trulands' behalf."

No. They are saying that the Trulands signed an agreement indemnifying the surety company, which means that the Trulands would take personal financial responsibility for any claims paid.

Quote: teddys

Quote: odiousgambit

This is the part I don't quite get. Should the sentence be changed like this?

"XL Specialty (surety company) claimed Robert Truland and his wife, Mary, were financially responsible because in spite of the fact that the couple signed a July 2011 agreement indemnifying them against financial harm if it had to pay out claims on Trulands' behalf."

No. They are saying that the Trulands signed an agreement indemnifying the surety company, which means that the Trulands would take personal financial responsibility for any claims paid.

That was common back in my construction company days. In order to get the highest bonding ability [therefore the ability to bid larger projects] all partners put up all the collateral they had?

I was a pretty young fellow with guts and about 80k in [embellished] equity with a million dollar bonding ability. If a project had to be finished on the surety company's dime, they wanted everything they could get. I fully expected to lose my home if I failed.