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September 2016

itt-tech

Former ITT Tech Employee Lawsuits

Blog, Claims, Repost / /

ITT Technical Institute suddenly shut down all of its campuses and online courses on September 6, 2016. By doing so, it puts approximately 8,000 employees out of work without warning. Those employees are fighting back. Former ITT Tech employee lawsuits have been filed in Delaware and Indiana. At least one of those lawsuits has requested class action certification. ITT Tech operated 130 campuses in 38 states and also offered online courses. In April 2016 it received a show cause letter from the Accrediting Council for Independent Colleges and Schools, ACICS, to prove that ITT Tech was serving its students in compliance with ACICS standards. That notice prompted the U.S. Department of Education, DOE, to issue a letter to ITT Tech in June 2016 requiring it to increase its surety to 20 percent of Title IV Funding it had received in the fiscal year ending December 2015. Title IV funds are used for federal student loans. ACICS held a hearing and determined that ITT Tech was still not in compliance with hits standards and was not likely to become compliant. This prompted DOE to issue another letter on August 25 that, among other requirements, increased the required surety to 40 percent of the Title IV Funding resulting in a total of $247,292,364. DOE gave the institute 30 days to pay over $152 million that was needed to bring the surety on file up to that amount. Rather than meet the additional requirements, ITT Tech closed the doors of its campuses and online classes. The employee lawsuits allege that ITT Tech was in violation of the federal Worker Adjustment Retraining and Notification Act. That Act requires employers to give at least 60 days notice before mass layoffs. The employees are seeking all of the wages and benefits they would have received during the 60 days after they should have received notice of the closing. It is not clear whether ITT Tech campuses that have less than 50 employees on site fall under that Act. The closure has left thousands of students nationwide hanging. Some had invested years in their education, and owe thousands of dollars in student loans for degrees they will not receive. For those that were fortunate enough to have just finished their degrees, ITT stated that they will receive their diplomas, but graduation ceremonies have been cancelled. The DOE has stated that ITT Tech students that have federal student loans can file a claim to have those debts erased. But, if they do, they cannot transfer any credits they may have received from ITT Tech to other schools. It should be noted that there are very few schools or colleges that will accept ITT Tech credits. http://www.legalreader.com/former-itt-tech-employee-lawsuits/

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QBE Expands Its Surety Capabilities with $73.5 Million Treasury Listing

Blog, Clients, News, Repost / /

NEW YORK, Sept. 15, 2016 /PRNewswire/ — QBE North America today announced that the United States Department of Treasury approved QBE Insurance Corporation (QBEIC) as a Certified Company with an underwriting limitation (also referred to as a “Treasury Listing”) of $73.5 million per bond. This achievement builds upon a previously approved Treasury Listing for another QBE subsidiary, General Casualty Company of Wisconsin, at $24.6 million per bond. “This additional capacity, supported by our balance sheet financial strength and claims paying ability, greatly expands our ability to meet the demands of large private and public projects on a national basis,” said Jeffrey S. Grange, President, QBE Specialty. “The increased Treasury Listing affirms our long-term commitment to building a market leading Surety platform for our appointed producers and Surety customers.” Matt Curran, SVP, Head of QBE Surety added, “Obtaining QBEIC’s Treasury Listing allows us to better serve our clients and producers as we focus on the middle market contractor segment of the Surety industry. This new Treasury Listing will allow us to positively build upon the strong momentum we have already established since launching our Surety efforts a few years ago.” QBE’s portfolio of Surety bonds includes contract and commercial bonds that can be tailored to meet a client’s specific business needs. In the U.S., QBE focuses on serving the needs of general contractors, road and heavy equipment contractors, other prime contractors, and major sub-trade contractors. QBE also offers commercial bond support ranging from small license and permit bonds to large corporate commercial bonds. QBE’s Surety team in the U.S. is an important part of the company’s global Surety platform, which includes Surety underwriting teams around the world serving customers in Europe, Asia and Australia. QBE Specialty underwrites risks and provides exemplary coverage and services to support the specialized needs of customers across a wide variety of segments and industry sectors. These include Accident & Health, Aviation, Cyber, Inland Marine, Financial Institutions, Healthcare, Management Liability & Professional Lines, Transactional Liability, Media & Entertainment, Trade Credit, and Surety, for appointed retail and wholesale producers. About QBE QBE North America is part of QBE Insurance Group Limited, one of the largest insurers and reinsurers worldwide. QBE NA reported Gross Written Premiums in 2015 of $4.6 billion. QBE Insurance Group’s 2015 results can be found at www.qbena.com. Headquartered in Sydney, Australia, QBE operates out of 43 countries around the globe, with a presence in every key insurance market. The North America division, headquartered in New York, conducts business through its property and casualty insurance subsidiaries. QBE insurance companies are rated “A” (Excellent) by A.M. Best and “A+” by Standard & Poor’s. Additional information can be found at www.qbena.com, or follow QBE North America on Twitter. http://www.prnewswire.com/news-releases/qbe-expands-its-surety-capabilities-with-735-million-treasury-listing-300328937.html

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itt-tech

ITT Educational Services Plunges to Record Low, Chubb Demands $19.8 M Collateral and Plans to Cancel All Surety Bonds

Blog, News, Repost / /

September 2, 2016 Clifton Ray – ITT Educational Services (NYSE:ESI) is down 13%, reaching a record week low earlier off a trading halt, after the company said in a SEC fling Chubb (CB) was demanding ITT to post collateral of $19.8 million in the form of an acceptable irrevocable letter of credit. Chubb also said it plans to issue notices of cancellation on all of the Surety Bonds, starting with the largest first. Most of the Surety Bonds contain a 30-day cancellation provision. Chubb indicated the cancellation notices are rescindable should the company demonstrate it will be able to operate in a fiscally responsible fashion in the absence of federal student financial aid as noted in the U.S. Department of Education’s letter to the company on August 25, in addition to the additional security the company is required to post to the ED. If the Surety Bonds are rescinded and the company does not maintain an acceptable surety bond for those ITT Technical Institutes where a surety bond is required, the certificate or license for those ITT Technical Institutes can be suspended, invalidated or revoked by the applicable state education agency. The company says it is currently reviewing this demand and its potential impact on the business. The stock decreased 11.81% or $0.042 during the last trading session, hitting $0.31. About 4.96M shares traded hands or 195.24% up from the average. ITT Educational Services, Inc. (NYSE:ESI) has declined 85.89% since January 28, 2016 and is downtrending. It has underperformed by 100.55% the S&P500. ITT Educational Services, Inc. is a well-known provider of postsecondary degree programs in the United States. The company has a market cap of $7.19 million. The Firm offers master, bachelor and associate degree programs to over 45,000 students, and short-term information technology and business learning solutions for career advancers and other professionals. It has a 0.36 P/E ratio. It has approximately 138 campuses.

ITT Educational Services Plunges to Record Low, Chubb Demands $19.8 M Collateral and Plans to Cancel All Surety Bonds Read More »

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Surety’s Indemnity Rights Eliminated by Subsequent Arbitration Agreement

Blog, Legislation, Repost / /

Most readers are familiar with the concept that performance bond sureties expect to recoup, from their principals, every dollar of cost incurred in responding to demands on the bond. And most readers are aware that the typical general indemnity agreement (GIA) gives the surety extensive rights, against the persons and companies signing on as indemnitors, to recover every dollar spent. But one surety was stopped short when it sought to recover costs of an arbitration from its principal, after the surety signed a three-party arbitration agreement, post-project, providing that all parties would be responsible for their own costs. A dispute arose between subcontractor and prime contractor, and the prime contractor also made demands against the sub’s surety. The prime and sub commenced arbitration. Then, prime, sub and surety entered into what the decision refers to as an amended arbitration panel agreement, and the surety joined the arbitration. This later agreement included the following: “Each party shall be responsible for and bear the costs of its own attorney’s fees and expenses and an equal portion of the panel’s costs and expenses.” The arbitration ended with an award in favor of the sub and surety and against the prime. The surety turned around and demanded that the sub reimburse the surety for $748,843.85 in arbitration costs, citing the terms of the GIA calling for that result. But the sub argued in response that the amended arbitration panel agreement had superseded the GIA, and the surety was thus not entitled to recover any such costs from the sub. A US District Court judge agreed with the sub, at least denying the surety’s request for summary judgment based on the terms of the GIA. The court noted: “It is a well-settled tenet of contract law that a latter-signed contract between parties on the same subject modifies a pre-existing contract.” And it stated that if the surety had wanted to preserve its rights under the GIA, when entering into the amended arbitration panel agreement, the surety “should have executed contractual amendments or other documents clarifying the status of [the sub’s] duty to indemnify [the surety].” This is basic contract law. The surety will undoubtedly remember should this scenario arise again. The case is Western Surety Co. v. S3H, Inc., 2016 U.S. Dist. LEXIS 101769 (D. Nev., Aug. 3, 2016), available here (LEXIS subscription required). Commonsense Construction Law LLC – Stan Martin http://www.lexology.com/library/detail.aspx?g=fe318f4e-7fd4-49ac-8acd-0e589b03be01

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