A bonding company is suing the head of iSun, the bankrupt Williston solar installer, asking a judge to find CEO Jeffrey Peck personally liable for millions in losses that the insurer incurred when Peck’s publicly traded firm fumbled industrial-scale projects.
Iowa-based Merchants Bonding Company also accused Peck of trying to shield his assets from creditors by transferring ownership of his $1.7 million second home in Florida to his wife on the eve of iSun’s recent bankruptcy filing. The insurer wants a federal judge to order Peck to set aside as much as $3.2 million while its lawsuit proceeds.
Otherwise, Merchants’ attorneys wrote, “there is a reasonable likelihood that [Peck] will destroy and/or deplete his assets by the time this litigation is resolved.”
The lawsuit puts pressure on the embattled CEO, who turned
a family electrical business into Vermont’s largest solar installer and one of its few publicly traded companies before iSun filed for bankruptcy this summer. Peck stepped down as CEO in February, then returned in April after the company board ousted his successor,
who claimed to have uncovered evidence that Peck and his leadership team had mismanaged and misappropriated funds. The company filed for Chapter 11 bankruptcy protection in early June in Delaware.
A court-overseen sale to a private investment firm in Texas is pending before a bankruptcy judge. The court is scheduled to review the proposed sale, as well as several objections to it, at a hearing next week.
The separate civil complaint against Peck, filed on Friday in U.S. District Court in Vermont, stems from a series of surety bonds that Merchants issued for iSun solar projects in Maine. The bonds, common in the construction industry, serve as a guarantee to customers that their contractor will finish the job. If problems arise, the bonding company makes the customer whole, then seeks to recoup its expenses from the contractor.
Merchants has issued more than $14 million in surety bonds for iSun projects, according to the lawsuit. The bond deals list iSun as an indemnitor, meaning the company is liable for any of Merchants’ financial losses. Peck is identified as an “individual indemnitor” in the agreements, copies of which were filed with the lawsuit as exhibits.
One of iSun’s projects was to construct a 6.51-megawatt community solar array in Scarborough, Maine, for a company affiliated with BNRG Renewables. From “virtually the very start” of the contract, iSun fell behind schedule and failed to pay subcontractors on time, leading some to stop work, BNRG wrote in a separate court filing in iSun’s bankruptcy case. BNRG claimed that it paid subcontractors directly to mitigate iSun’s “mismanagement” and “failings.”
On May 24, the BNRG affiliate terminated its contract with iSun because the installer was six months behind schedule, the customer said in a letter to iSun. As a result, Merchants says it spent more than $2.5 million to help salvage the project.
The Scarborough contract is not the only one that iSun has lost, and Merchants said it expects to pay out hundreds of thousands of dollars in future claims by iSun customers.
Under the indemnity agreements, Peck and iSun should reimburse the bonding company for those costs, Merchants contends. Because iSun’s Chapter 11 bankruptcy proceeding halts most litigation against the company, Merchants is suing Peck himself.
But the bonding company wrote that it is “concerned” about Peck’s ability to pay. Merchants asserted that the CEO is named as a personal indemnitor on surety bonds worth a combined $40 million.
Less than a month before iSun filed for bankruptcy, ownership of a 5,900-square-foot home in Delray Beach, Fla. was transferred from a trust in Jeff Peck’s name to a trust named for his wife, Krista, at a cost of $10, according to Palm Beach County property records. The Jeffrey J. Peck Revocable Trust bought the property for $1.07 million in December 2018, about six months before Peck took his family firm, then called the Peck Company, public. The home was appraised last year at $1.7 million.
The Krista A. Peck Revocable Trust then sold the property on July 25 to Ashley and Bradley Friedman for $1.96 million, according to property records reviewed by
Seven Days.
“Mr. Peck’s ability to quickly transfer his own interest in real property also concerns Merchants,” its attorneys wrote.
Peck did not respond to requests for comment, nor did attorneys for Merchants.
Peck earned $945,000 last year as CEO, including a $267,500 bonus,
Seven Days previously reported. iSun was short on cash, laying off workers and falling behind on benefits contributions, and his package was criticized by a union representative.
A briefly tenured iSun CEO, Robert Zulkoski,
filed a whistleblower complaint with the U.S. Securities and Exchange Commission in June accusing Peck and other top iSun executives of defrauding a government aid program and making a host of other questionable management maneuvers. iSun’s board of directors picked Zulkoski to replace Peck as CEO in March in a bid to turn around the distressed company. Zulkoski was fired six weeks later, and Peck was reinstalled.
Weeks before Peck stepped down, the CEO was cited for driving under the influence after a Williston police officer discovered Peck standing in a ditch next to his car around midnight on January 12. The Tesla Model S had extensive front-end damage, and its airbags had deployed. That's according to a police affidavit that
Seven Days obtained through a public records request.
Following field sobriety tests, the officer took Peck to the police department for processing. Peck tried to call his “corporate attorney” but ultimately spoke to an on-call public defender. He recorded blood-alcohol levels of 0.144 and 0.156 on evidentiary tests at the station, nearly two hours after the crash, according to the affidavit.
There is no public record of a criminal case against Peck, which suggests that the charge was either dropped or sent to an out-of-court diversion program. But Peck acquiesced to a temporary civil suspension of his driver’s license, according to court records.
The citation occurred during a critical time for iSun. In the days and weeks preceding it, Peck had signed contracts for more than $10 million in new loans and cash advances for iSun at high interest rates in an apparent effort to keep the company afloat.
It’s unclear whether iSun’s board of directors knew about the citation or whether it was a factor in the decision to replace Peck. Neither Peck nor board member Claudia Meer responded to emailed questions.
Regardless, Peck was back in the role on April 22, and he signed the company’s bankruptcy filing in June.
His future with the company that his father founded in the 1970s remains murky. At the time of the bankruptcy filing, iSun’s board named Rob Vanderbeek as chief restructuring officer in anticipation of a court-overseen auction.
No firms other than Clean Royalties placed bids to purchase iSun, the company said in a recent court filing. Clean Royalties’ parent company, Siltstone Capital, has not articulated how it intends to restructure iSun should a judge approve the $10 million purchase.
Meanwhile, a committee of unsecured creditors has hired an attorney and requested corporate documents to investigate potential legal claims arising, in part, from Zulkoski’s whistleblower complaint. Several other creditors, including Merchants, have filed objections to aspects of the sale.
In its objection, Merchants and a second bonding company, Great Midwest Insurance, assert that if Siltstone acquires any of iSun’s bonded project contracts through the sale, Siltstone should also be required to assume the millions in indemnity obligations of Peck and iSun.
“The Sureties are — by far — the Debtors’ largest and most significant creditors,” the bonding companies wrote.
The parties are discussing a resolution to the bonding companies’ objections, iSun’s attorney told the bankruptcy court in a filing on Wednesday.