Legal Question in Business Law in Massachusetts

chapter 11

We are a subcontractor on a project which the general contractor has filed chp-11. What recourse does my company have?


Asked on 3/19/07, 9:49 am

3 Answers from Attorneys

henry lebensbaum Law Offices of Henry Lebensbaum (978-749-3606)

Re: chapter 11

This is a re-organization matter.

I would suggest that you consider if you should continue to work until you are assured how you are going to get paid.

As a subcontractor you become a creditor as against the contractor, probably unsecured. The contractor is going to have to list you as a debt. You should be getting notice about this.

Given the information, that is all that I can think of. If you have any questions, you can contact me.

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Answered on 3/19/07, 10:13 am
Barry Levine Law Office of Barry R. Levine

Re: chapter 11

You are probably a general unsecured creditor. If the job was bonded, you may have recourse for getting paid against the contractor's bond. Otherwise, you should plan on attending (depending upon how much you are owed) the informal meeting of creditors and/or the initial section 341 meeting. The Office of the United States Trustee will be seeking to appoint a creditors' committee. You should see if you be on the creditors' committee. Generally, chapter 11s with a creditors' committee result in a greater dividend being paid than a chapter 11 without a creditors' committee (take it from one who usually does debtors' work). As for continuing to work post-petition, the whole purpose of a chapter 11 is to freeze the debtor's finances in place on the date of the filing, see if the debtor can meet its on-going expenses as they come due and, finally, propose a plan of payment to its creditors. A debtor that fails for whatever reason to pay its bills post-petition (suppliers, sub-contractors and the like) runs the risk of the chapter 11 either being dismissed or converted to a chapter 7 liquidation. I'd be pleased to discuss this with you further. Just give my office a call.

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Answered on 3/19/07, 1:57 pm

Re: chapter 11

If the job was not bonded and you do not have a lien on the property, you are a general unsecured creditor and will need to attend meetings of the creditors and file a proof of claim.

If there is a bond, then you can make claim against the Bond. If have a lien filed timely before the bankruptcy against the property, then you may have other alternatives, subject to any action to vacate the lien as part of the bankruptcy.

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Answered on 3/20/07, 8:26 am


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