Did the Sad Truland Group Bankruptcy Start with the Utah Data Center Project?

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The Truland Group's bankruptcy is unfolding with tragic poignancy and pace.

Everything, from the auctioning of the company's vehicle fleet (see the photo above) to a bankruptcy court session where jobless former staff members and creditors briefly confronted CEO Robert Truland, speaks to the waste and damage caused by the failure.

A year ago Truland was known as the 10th biggest electrical contractor in the U.S., with annual revenue of about $500 million. It is now liquidating assets after filing for protection from creditors in federal bankruptcy court in Alexandria, Va. July 31. A trustee has been appointed to oversee the work.

Baltimore-based XL Specialty Insurance Co., Truland's principal surety, indicates in court filings that its exposure to claims on Truland bonds could be more than $12.5 million. XL is suing Robert Truland in federal district court in Alexandria to recover $1.3 million that XL says it has already spent on Truland bond claims.

According to one of many stories on the Truland bankruptcy by Daniel J. Sernovitz of the Washington Business Journal, Robert Truland told a bankruptcy court judge that his weekly salary was $25,000. 

Sernovitz wrote that XL obtained a personal indemnity agreement from Robert Truland in 2011.

The bankruptcy filing came while Truland was working on about 16 projects in the Washington, D.C. area alone.

On one project, the Wakefield High School Reconstruction, a Truland affiliate called Pel-Bern Electric Corp. has a roughly $11.3-million contract with Forrester Construction Co. On August 6, according to documents filed with the bankruptcy court by XL, Forrester Project Exexutive Joseph Ockershausen expressed  dismay in a letter to XL that the surety had not since the bankruptcy filing agreed to "comply with its obligations under the bond." Forrester had made timely notice, Ockershausen wrote, and time was slipping by to avoid delays in finishing the almost-completed. It isn't clear what has happened since. 

An even more interesting letter, another exhibit to a filing by XL, provides clues to the big federal data center project that may have pushed Truland into bankruptcy.

The letter was from James Fredmund, operations vice president of Balfour Beatty/DPR/Big D, a joint venture. It had sent sent a notice of default and claim to XL in October, 2012 on Truland's roughly $47-million subcontract for a National Security Agency data center in Utah. The project was plagued with electrical problems. According to Sernovitz and the Washington Business Journal, a representative of the U.S. Army Corp of Engineers says it has settled most payment issues with the prime contractor. But it isn't clear how much Truland will collect when an arbitration of its disputed final payment is completed.

The 2012 letter from the prime contractor to XL said that Truland had claimed that accelerating work with added manpower would endanger its ability to meet payroll.

Whether that project and that trouble was the beginning of the end for Truland may become clearer in coming weeks.