Bankruptcy is a word no one wants to hear, especially when it is filed by the owner of the project. When the owner files bankruptcy it almost always puts a stop to the flow of money and once money stops flowing, contractors and suppliers stop getting paid. Upon the filing of bankruptcy, the bankruptcy code prevents the commencement or continuation of any action against the bankrupt party as well as any act to create, enforce or perfect any lien against the bankrupt party’s property. The question is does bankruptcy by a project owner prevent the recording of a mechanics lien by a contractor or supplier who is not paid on the project and how does the contractor or supplier protect its mechanics lien rights while the owner is in bankruptcy?
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