An insurance company that owes $5 million to several creditors, mostly homeowners of the controversial Tottotville Subdivision, has filed for bankruptcy in federal court.
Telebond Insurance Corp., through counsel Timothy Bellas, filed Thursday in the U.S. District Court for the NMI a Chapter 7 bankruptcy. Telebond is the performance bond insurer for the Tottotville Subdivision project's general contractor, Telesource CNMI Inc.
Under a Chapter 7 petition, most assets of the debtor are liquidated as quickly as possible to pay off debts over a period of three to five years.
Telebond claimed it has $201,114.08 in total assets, but has $5,021,701.12 in liabilities. Of the $5,021,701.12 in total liabilities, $5,021,114.37 is for creditors holding unsecured nonpriority claims, while the rest or $586.75 was for creditors holding unsecured priority claims.
For nonpriority claims, the company owes, among others, the Northern Marianas Housing Corp. $694,850.73 and a total of $4,275,644 to 44 homeowners that belong to the Jessica Castro Group and Joseph Flores Group.
The homeowners filed a lawsuit in 2006 against NMHC, SSFM International Inc., Telesource, and Telebond for allegedly defrauding them in the construction of defective homes in Koblerville.
In November 2012, Superior Court Associate Judge Perry B. Inos declared that Telebond Insurance is jointly liable for $1,889,738 in damages arising from the defective construction of the homes belonging to the Castro Group and $694,850.73 for indemnifying NMHC.
In January 2011, it was reported that NMHC settled with 35 of the 45 homeowners.
In December 2012, the same 44 homeowners-34 from the Castro Group and 10 from the Flores Group-received checks and cash out of the $4.25 million settlement from project manager SSFM International Inc.
Joaquin DLG. Torres, counsel for the Flores Group, then disclosed that Inos' judgment in July 2012 awarded to homeowners and NMHC $4.99 million, but it ended up with $4.25 million settlement.
The Flores Group had settled their claims against SSFM. The law offices of O'Connor is representing Telesource and Telebond.