order number 5643239
I have filed a lien with Levelset but since doing so on Monday have learned the company has closed and filed for chapter 11 - does this make the lien ineffective?
1 reply
Aug 4, 2021
Chapter 11 is reorganization of a company's debts while under the protection of the federal bankruptcy laws. As far as creditors are concerned, there are unsecured and secured creditors. The latter are typically banks holding mortgages, but a construction lien is recognized as security for the full payment of the debt to the contractor (to the extent of the property's value). The timing of your lien being filed is a major factor in whether it is valid in bankruptcy. You should consult with a lawyer specializing in bankruptcy law about this and because creditors are often required to file a "proof of claim" and these must be done correctly and timely so that your lien is not avoided in the bankruptcy court. You might be allowed to be relieved from the bankruptcy "automatic stay" from creditor actions to collect the debt since you are secured. Even if your lien is invalid you might still be able to get some payment as an unsecured creditor. Again, you will need a bankruptcy lawyer's help with this.