Managing Family Debt to Rebuild Family Business
Our client was a Contractor in a family-owned firm with a history of successfully completing several million dollar jobs. The Contractor’s recently deceased parents were the previous owners. The Contractor and his late father shared the same name.The father had incurred significant debt that he was unable to payback, due to his death. Upon the father’s death, the debt passed on to the Contractor, causing a dramatic downgrade to his credit rating. The Contractor had never been bonded before. He came to us in need of help to acquire a bond for a project he had been awarded, but was unable to perform.
Our Shorewest Surety Team reviewed the Contractor’s financial statements. The statements were completed in-house by a family member who lacked the accounting knowledge the business required. We walked them through the process of job costing both their income and expenses and compiling a working in process schedule. We partnered the Contractor with a new CPA who specialized in construction accounting and prepared financial statements demonstrating the Contractor’s percentage of completion basis.
Our Team conducted a thorough debt analysis, allowing us to show that the debts incurred were not the Contractor’s. Nevertheless, the Contractor paid back the debt, exhibiting great character and positively influencing the surety underwriters in the final underwriting process.
After our involvement, the Contractor was easily able to bond the $1 million project that they had previously been awarded.