Tag: earmarking

4th Circuit: Campbell v. Hanover Insurance Co.- Earmarking and New Value Defenses to Preferences

Summary:

ESA Environmental Specialists, Inc. (ESA) was an engineering firm that had various constructions projects under contract with the federal government. As such, ESA was required to obtain surety bonds to secured completion of the contracts and pay vendors and subcontractors. ESA originally obtained eight surety bonds from Hanover in 2006. In April 2007, ESA borrowed $12.2 million from Prospect Capital to fund operations. Shortly, thereafter, ESA sought seven additional surety bonds from Hanover. Hanover, however, required that ESA to obtain a Letter of Credit for $1.375 million from Sun Trust, which was accomplished on May 17, 2007, through depositing such amount in a CD with Sun Trust.… Read More

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