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February 16, 2022 Book Review

Surety Aspects of Bankruptcy Law and Practice

Reviewed by Daniel I. Waxman

The stated goal of Michael E. Collins and Chad L. Schexnayder, the editors of Surety Aspects of Bankruptcy Law and Practice, is for the “book to be useful to all bankruptcy counsel and bankruptcy courts as a resource to understand the implications of surety principles and claims in bankruptcy cases.” This goal, which the editors have accomplished, is laudable, as many bankruptcy practitioners (and courts) tend to treat surety credit as tantamount to standard insurance incorrectly. The very first chapter of the book, Tenets of Surety Law, explains this false equivalency and provides practitioners with a detailed understanding of the principles of surety law and how they compare (or differ) from those of insurance. This foundational knowledge is then utilized in each subsequent chapter, explaining when surety issues typically arise in bankruptcy cases and how courts have ruled on these issues. Unlike many texts, however, Surety Aspects of Bankruptcy Law and Practice does not merely recite existing case law. It further explains where certain of these decisions may have misinterpreted surety law and how practitioners should argue for the ‘correct’ result. The case citations have been recently updated and include decisions from the current year. In addition to this case law authority, the book also provides suggested language to include in ‘DIP Financing’ or ‘Confirmation’ orders to protect and preserve the rights of surety bond issuers. This book is an invaluable resource for any bankruptcy practitioner representing a surety or involved in a case where surety issues are prominent. At a bare minimum, the book preemptively flags the issues that the practitioner will likely need to address. If the answer isn’t already provided therein (which it probably is), it will give them a significant head-start over their counterparts.

Notwithstanding the editors’ stated goal of educating bankruptcy professionals on surety law, the book is perhaps even more valuable to surety law practitioners (or in-house claims departments) who are confronted with a potential bankruptcy filing. While the chapters provide surety-specific content, they also include summaries of the general principles of bankruptcy law and the typical events in chapter 7, 11, or 15 bankruptcy cases. Understanding how a particular surety bond, surety bond claim, or general indemnity agreement will be treated in the event of a bankruptcy filing is critical to surety professionals, not only in claims management but in making initial underwriting decisions. Although the book focuses on all categories of surety bonds, it is particularly helpful to practitioners focused on payment and performance bonds in the construction sector. There are numerous case law citations and case narratives addressing issues specific to construction bonds. The materials related to the treatment of bonded contract funds and equitable subrogation rights alone justify the purchase of this book by a surety practitioner with clients in the construction space.

In sum, I would recommend that both bankruptcy and surety law practitioners alike purchase Michael Collins’ and Chad Schexnayder’s Surety Aspects of Bankruptcy Law and Practice.

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Reviewed by Daniel I. Waxman

Daniel I. Waxman is the senior vice president and general counsel at KEWA Financial, Inc.