Home>Levelset Community>Legal Help>How does a Chapter 11 filing affect service work performed prior to the filing? How does this impact lien rights, warranties, and guarantees on jobs where we wont be receiving payment?

How does a Chapter 11 filing affect service work performed prior to the filing? How does this impact lien rights, warranties, and guarantees on jobs where we wont be receiving payment?

GeorgiaBankruptcy Mechanics Lien

Multi-State

2 replies

Sep 20, 2017

The intersection of mechanics liens and bankruptcy is an interesting one. In fact, there is a lot of good information (that got more in depth than the information provided here) available to read here: https://blog.zlien.com/construction-payment/the-indispensable-guide-to-mechanics-liens-in-bankruptcy/

In a very, very quick nutshell: Mechanics liens are generally one of the best ways to secure payment even in the face of a bankruptcy filing. Since most mechanics liens arise/attach at the start of the project, the bankruptcy codes allow them to be perfected even after the bankruptcy has been filed and during the automatic stay. Further, if a lien is so perfected the bankruptcy code allows for the period in which the lien must be enforced to be tolled (suspended) for the duration of the automatic stay, provided a certain notice is filed. Finally, mechanics liens cannot be stripped by the bankruptcy. Note, however, that preliminary notice and lien filing deadlines still apply, however.

0 people found this helpful

Helpful

Still looking for the right answer? Ask me your question!

Aug 24, 2022

Also, if a lien is perfected in this way, the bankruptcy code lets the time when the lien must be enforced be put on hold (tolled) for the length of phrazle the automatic stay, as long as a certain notice is filed. Lastly, the bankruptcy cannot get rid of mechanics' liens. Note, though, that the deadlines for giving a preliminary notice and filing a lien still apply.

Report Spam

Add your answer or comment

Not the answer you were looking for? Check out other Bankruptcy topics or ask your own question

Get Free Advice

Post a question in our community to get free advice from Construction Attorneys in your state, typically within a week. Questions are public, so do not share personal information. For extra privacy, select the anonymous option.