When you’re taking an irrevocable letter of credit (ILOC) for collateral on an account, and that account says that they don’t have the money but can get a 3rd party investor.
On the ILOC format you get from that particular Surety Company, regardless of the 3rd party indemnitor, your Principal will be listed as Principal on the ILOC and one of the Corporate Officers that owns 10% or better of the business will sign.
3rd party doesn’t have to be on the ILOC, it’s our client and the owner that has to be.
When any form of collateral is held, certified check, ILOC, stocks, etc. the Principal cannot get that back until 90 days from the date of acceptance by the Obligee.
That also pertains to taking collateral in general to cover all jobs.
For example, if a principal has 4 jobs out there and we are holding general collateral (Not for a Specific job), they cannot get that money back until the 90 day rule stated above.
They would have to wait until all jobs are done and past that 90 day rule.
Exceptions in this case could be them coming in with a solid financial statement that we can present to the Surety Company and request the monies be released.