Donald Trump and his co-defendants have been in talks with the insurance giant Chubb for a $464 million appeal bond in the former president's civil fraud case, but the company backed out — days after raising eyebrows for granting Trump a bond in a separate case, according to Trump's lawyer.
Chubb was one of more than 30 companies that refused to draft a bond that would temporarily halt the massive business fraud ruling, Trump's lawyers said in a suit before the New York Court of Appeals on Monday.
Lawyers in that filing asked the appeals court to “put the brakes” on the ruling before New York Attorney General Letitia James can begin collecting it — a process that could begin as soon as next week. James said she would seize Trump's assets if he was unable to pay the judgment.
A panel of judges on that court has not yet ruled on Trump's request to temporarily halt the ruling without him having to post a fully secured bond.
Alan Garten, a lawyer for the Trump Organization, said in that filing that Chubb was the only company willing to consider collateral for the appeal secured by a mix of liquid assets and real estate.
Other companies – which included Warren Buffett Berkshire HathawayLiberty Mutual, Allianz, and Travelers – He only wanted cash or other liquid assets.
Appeal bonds are intended to prevent the loser of a court ruling from using the appeals process to delay or avoid paying their fines. Bonds also ensure that if an appeal is unsuccessful, the plaintiff can quickly obtain their award.
Garten said Chubb was “actively negotiating” with Trump and his co-defendants. But “over the past week,” Chubb said, it reversed course and “notified the defendants that it could not accept real property as collateral.”
“Although disappointing, this decision was not surprising given that Chubb was the only guarantor willing to even consider accepting the properties as collateral,” Garten said.
Garten's statement came more than a week after it was revealed that a Chubb affiliate gave Trump a $91.6 million appeal bond in a separate civil case in which he was found liable for defaming writer E. Jean Carroll after she accused him of rape.
Chubb faced rapid scrutiny to ensure this bond was underwritten. Media outlets noted that Chubb CEO Evan Greenberg had previously been appointed by Trump to a trade policy advisory committee and to a business group aimed at combating the economic toll of Covid-19.
On Wednesday, Greenberg sent a letter to investors, clients and brokers who expressed concerns about those bonds.
“As guarantor, we do not take sides, it would be wrong for us to do so, and we are in no way supporting the defendant,” Greenberg wrote. “When Chubb issues an appeal bond, it does not adjudicate claims, even when the claims involve objectionable conduct.”
He added that Trump's bail in the defamation case was “fully secured.”
Records show Trump used Schwab's brokerage account as collateral for bonds related to Carroll.
CNBC asked Chubb on Wednesday if the company was talking to Trump's team about taking bond in the business fraud case.
In response, Chubb said: “As a matter of policy, we do not confirm or deny whether we are engaged in commercial discussions with companies or individuals.”
A Chubb spokesperson did not respond to CNBC's request for comment on the court filing on Monday.
Lawyers in that filing argued that Trump would face significant harm if he had to sell parts of his real estate portfolio quickly to raise enough money for a bond.
They said it would be “impossible” for them to file a full appeal, despite their “best efforts”.
This is largely because the few underwriters willing to write bonds of this size will not accept “hard” assets, such as real estate, as collateral, they said.
Since the person who appeals often loses again, surety companies consider the bonds “risky” and typically demand that they be fully backed by liquid assets, said J.D. Weisbrot, president and chief underwriting officer at JW Surety Bonds.
Unlike banks, which are better equipped to tie up liens and sell real estate, insurance companies “are not in the business of holding real estate,” Weissbrodt said in an interview with CNBC.
However, Weissbrodt agreed with Trump's lawyers that the size of the bonds was “unprecedented.”
“I have never heard of a bond of this size being required from a private institution,” he said.
As James's deadline to collect his fraud conviction approaches, the Republican presidential candidate has taken to social media to vent his anger against the case.
Trump posted Tuesday morning on his social networking site, Truth Social, that the trial judge “actually wants me to pay hundreds of millions of dollars for the right to appeal his ridiculous decision.”
“I should not have to pay any money, as the corrupt judge and prosecutor forced me, until the end of the appeal,” he said in a later post.
In fact, New York court rules require Trump to file an appeal bond in order to prevent James from moving to collect a fraud judgment.
“No one has ever heard of anything like this,” Trump wrote on the site. “I will have to mortgage or sell significant assets, possibly at rock-bottom prices, and if I win the appeal, they will be gone.”
