In two opinions, In re Harrelson Utilities, Inc. , No. 09-0281S-8-ATS (E.D.N.C. Bankr. July 3D, 2009) and In re Mammoth Grading, Inc., No. 0901286-8-ATS (E.D.N.C. Bankr. Aug. 24, 2009), bankruptcy court held that a subcontractor’s lien rights did not constitute “an interest in property” under the exception in 11 U.S.C. § 362(b) (3) and that post-petition claims of liens and notices of claims of liens were invalid and unenforceable. These decisions “turned the construction industry1s standard operating procedure on its head.”
Verging on an advisory opinion, the District Court questioned whether the bankruptcy court erred in determining that such liens did not arise until the filing of a notice of claim of lien by the subcontractor. Because the Trustee had unilaterally surrendered estate property to the only remaining appellant, however, the District Court was constrained dismiss the appeal, but ordered that the bankruptcy court opinion be vacated.
For a copy of both the district court opinion, please see: