Commitments and Contingencies

12 Months Ended

Jul. 31, 2020

Commitments and Contingencies [Abstract]

Commitments and Contingencies

17. Commitments and Contingencies

The Company and its subsidiaries are party to various legal and regulatory proceedings and claims incidental to their business in the ordinary course.  In the opinion of management, based upon information currently available, the ultimate liability with respect to these proceedings and claims will not materially affect the Company’s consolidated results of operations or financial position.

The Company maintains insurance coverage for various aspects of its business and operations.  The Company has elected, however, to retain all or a portion of losses that occur through the use of various deductibles, limits and retentions under its insurance programs.  This situation may subject the Company to some future liability for which it is only partially insured, or completely uninsured.  The Company intends to mitigate any such future liability by continuing to exercise prudent business judgment in negotiating the terms and conditions of its contracts.  See Note 2 for a further discussion of insurance and insurance reserves.

Related to its insurance coverage, the Company is contingently liable pursuant to standby letters of credit as credit guarantees to certain insurers.  As of July 31, 2020, the Company had $21,528 of standby letters of credit related to securing reserved claims under workers’ compensation insurance and the July 29, 2020 sale and leaseback transaction.  All standby letters of credit are renewable annually and reduce the Company’s borrowing availability under its Revolving Credit facility (see Note 7).

As of July 31, 2020, the Company is secondarily liable for lease payments associated with two properties.  Prior to 2020, the Company was not aware of any non-performance under these lease arrangements that would result in the Company having to perform in accordance with the terms of these guarantees, and therefore, no provision has been recorded in the Consolidated Balance Sheet at August 2, 2019 for amounts to be paid in case of non-performance by the third party by the primary obligor under such lease agreements.  During 2020, the Company received notice regarding non-performance by the primary obligor under these lease arrangements.  At July 31 2020, the Company has recorded a provision of $344 in the Consolidated Balance Sheet for amounts to be paid as of result of non-performance by the primary obligor.

The Company enters into certain indemnification agreements in favor of third parties in the ordinary course of business.  The Company believes that the probability of incurring an actual liability under other indemnification agreements is sufficiently remote so that no liability has been recorded in the Consolidated Balance Sheet.