Over 55,000 businesses went bankrupt in 2014, according to the U.S. Department of Labor. When a business declares bankruptcy the court in every state requires a receiver bond (assignee bond) to cover any unlawful handling of money.
This surety bond is required by states because even though the defunct company is bankrupt it still has to be responsible for any money it receives.
What Makes A Company Go Bankrupt?
The sheer number of possible reasons a company in America can go bankrupt are far too vast to cover in one blog post. A stagnant economy, acts of weather, new products, competition, innovation, unable to compete for talent, local politics, and even federal legislation can all be the domino that knocks them all down.
In recent years more businesses have closed in America than have opened. There’s no doubting that operating a business in any type of recovery, especially one that is attempting to build from a recession, is difficult right now. This means businesses have to know how to handle their operations whether they are open or about to close.
Surety Bond Requirement
No matter the reason why a company goes bankrupt it still has to follow certain practices in order to satisfy shareholders, workers, creditors, etc. State and federal legislation both allow companies to use bankruptcy as a way to satisfy the parties involved without having to take on additional debt. in order to do this, however, a surety bond must be obtained.
Any company, large or small, is required to use an assignee bond (receiver bond) to insure against any wrongdoing concerning handling of rents and payments made to the company going through bankruptcy.
The surety bond cost varies based on state and local legislation. The company’s receivables and value also play a role in determining how the court sets the receiver bond amount.
Assignee Bond Protection
When a business is dealing with bankruptcy the assignee bond covers them financially should anyone handling the account mishandles funds. Not having the surety bond protection means the company who is already dealing with such a financial problem that they have to close down is now faced with the extra burden of paying things twice because someone didn’t handle money properly.
Jurisco understands the pressures a business is under. That is why our office is easy to reach, willing to discuss the situation, and quick to act when anyone requires a receiver bond. A business facing bankruptcy can contact Jurisco anytime to set up a surety bond they may need to help them.