In August 2009, Equiguard Inc. announced that it would seek bankruptcy protection in filing for Chapter 11 reorganization due in large part to a dispute with its insurer. Equiguard’s business at the time of filing was experiencing solid growth from the previous year. The company assured its customers that the extended service agreements currently in the market would be honored by Assurant Solutions Inc., the former insurer used by Equiguard.

As the Chapter 11 legal wheels began to turn, there were a few bumps in the road as some claim checks were returned marked as nonsufficient funds (NSF). According to the company, the checks should have been marked account frozen and not as NSF. The rules under Chapter 11 filing prevented Equiguard from paying any of its pre-bankruptcy obligations without Bankruptcy Court approval.

With those bumps now behind them, Equiguard president Craig Funke recently toldThe NEWSthat everything is again moving full-speed ahead.

Funke said, “Frankly, the loss ratios in the HVAC warranty business have been very challenging for a while, which goes to show extended warranties are of great value to consumers, but certainly this business is not for the faint of heart. No other company has ever gone this long in the warranty business in the HVACR industry. We are here to stay, and the reorganization enables us to continue to protect our customers’ extended warranty programs. We have been acquired by H.I.G. Capital with over $7.5 billion in capital under management. We will now be part of Service Net, which is the premier administrator of service warranty programs for some of the world’s largest and most respected brands.

“It is important to note that filing Chapter 11 allowed us to continue to insure our customers’ agreements through the reorganization process,” said Funke.

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Publication date:03/29/2010