How to Secure Payment When There Is Bankruptcy on a Construction Project Part 2
Bankruptcy on a construction project is never an isolated incident. It is an unfortunate turn of events that can impact the lives of everyone attached to a project. In this four-part series, a Charlotte contractor attorney at Cotney Construction Law is tackling bankruptcy in the construction industry and how payment can be secured when bankruptcy does find its way to a construction project. In part one, we covered how bankruptcy occurs in construction. Now, we will discuss who is impacted when someone on a project files for bankruptcy.
Don’t let bankruptcy stop you from securing payment for the work and materials you provided. If you are in such a position, it is in your best interest to consult with a Charlotte construction litigation lawyer who can fight on your behalf.
The Effects of Bankruptcy on a Construction Project
An owner or general contractor going bankrupt can spell doom for an entire project. When that happens, absolutely all progress on a project is put on hold until the bankruptcy is sorted out. Contractors and all other parties involved are at the mercy of a surety or other entity that could potentially step in and fund the project. An owner that goes bankrupt can lead to a ripple effect that can cause other parties on a project to go bankrupt due to a lack of funding.
A similar chain reaction can even occur when an unrelated party goes bankrupt on a project. When another party goes bankrupt, everything that they were working on can be affected. All other parties are prohibited from working on anything that is within their scope of work until the other party’s bankruptcy is resolved. Such a stall can massively impact other contractors and suppliers who had nothing to do with the bankruptcy. For this reason, please consult with a Charlotte construction litigation attorney when facing any situation that threatens your earned payments.
As we move into the second half of this series, we will be focusing on the mechanic’s lien, often a contractor’s last resort when securing payment. Please join us in part three, where we will be discussing the benefits of filing a mechanic’s lien, and part four, where we will be concluding with instructions on how to properly file a mechanic’s lien.
If you would like to speak with a Charlotte contractor lawyer, please contact us today.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.