HomeMy WebLinkAbout07.b.1) Report on NCCI, Inc. voluntary defaultmeyers i nave
DATE
TO:
FROM:
555 12th Street, Suite 1500
Oakland, California 94607
tel 510.808.2000
fax 510.444.1108
www.meyersnave.com
BOARD REPORT MEMORANDUM
April 26, 2011
Central Contra Costa Sanitary District
Board of Directors
Kenton L. Alm
Kenton L. Alm
Attorney of Law '
kalm @meyersnave.com
RE: NCCI, Inc. Default
Treatment Plant Piping Renovations (Phase 5), District Project 7276
Early in April, District staff first became aware of the potential that the District's contractor
( "NCCI ") on the Treatment Plant Piping Renovations (Phase 5), District Project 7276, was
potentially facing financial problems that could affect its completion of this two -year project.
Information had been obtained that subcontractors and suppliers had not been fully paid.
Inquiries were made both on District staff and Counsel levels regarding the ability of NCCI
to continue performance of the contract work.
On April 11, 2011, the District received a notification from NCCI's bank (`Bank ") that it
was a secured creditor of NCCI and, pursuant to Uniform Commercial Code security
interests it held, the Bank directed the District to forward all future payments due to NCCI
to the Bank. Conversations were initiated between District Counsel, the Bank's counsel and
NCCI's counsel.
On April 25, 2011, a letter from NCCI was forwarded to the District by NCCI's bonding
company counsel, which was. titled a "Voluntary Letter of Default & Letter of Direction."
The bonding company counsel forwarded a separate letter indicating that the Voluntary
Default by NCCI would become effective on April 29, 2011 at 5:00 p.m. The import of
these letters is that NCCI acknowledges that it is financially unable to perform or complete
the performance of the work or comply with its contractual obligations on the project. The
letters further indicate that Old Republic Surety Company will work with the District to
complete and close out the project as quickly as possible.
Old Republic Surety Company has retained the assistance of Stup Consulting to review the
status of the project and assist with directing completion of the work. It is anticipated that
counsel for Old Republic will draft and forward a Takeover Agreement within the next few
A PROFESSIONAL LAW CORPORATION OAKLAND LOS ANGELES SACRAMENTO SAN FRANCISCO SANTA ROSA FRESNO
To: Central Contra Costa Sanitary District
Board of Directors
From: Kenton L. Alm
Re: NCCI, Inc. Default
Treatment Plant Piping Renovations Project (Phase 5), District Project 7276
Date: April 26, 2011
Page: 2
days which will contractually outline the takeover of NCCI's responsibilities by Old
Republic.
Based on Old Republic's intention to take over and complete the project, its counsel
contends that all monies due NCCI and future payments for completion of the project work
should be forwarded to Old Republic. Accordingly, a dispute apparently exists between
NCCI's Bank and Old Republic as to which entity has priority in receiving any funds
remaining due to NCCI, including monies residing in the escrow retention account for the
work which has been completed.
More information may be available by the time of the Board meeting, and both staff and
District Counsel will be present to provide any additional details and answer questions.
KLA:mv
1634916.1
A PROFESSIONAL LAW CORPORATION OAKLAND LOS ANGELES SACRAMENTO SAN FRANCISCO SANTA ROSA FRESNO