A bankruptcy case can help define the enforceable bond contract

By Lisa Tancredi and Laura Murphy (May 31, 2022, 4:50 p.m. EDT) — On June 6, the United States Court of Appeals for the Fifth Circuit will hear oral argument in Argonaut Insurance Co. v. Falcon V LLC, a case that is being followed with interest by the surety industry.

In Falcon V, the bankruptcy and lower district courts held that a bond program was not an enforceable contract. As a result, the debtor was relieved of its unsecured obligation to exonerate or indemnify the surety, even though the bonds would remain in place to support ongoing operations.

Falcon V presents several important and unresolved issues. First of all, the question arises whether…

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