Tag: subcontractor

E.D.N.C.: Ferguson v. Mammoth Grading, Inc.- Whether Post-Petition Claim of Liens Violated § 362

Summary:

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. … Read More

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E.D.N.C.: Kiddco v. Callaway- Avoidance of Preferential Payment to Subcontractor

Summary:

Jacobsen Construction entered into a contract with Kiddco to perform subcontract work on a project at Wake Technical Community College.  On May 7, 2004, Kiddco submitted an invoice to Jacobsen for $90,625.27 for grading work at the site and on June 2, 2004, submitted a second invoice for another $102,366.70.   On June 10, 2004, Jacobsen paid Kiddco $35,000 and then on June 29, 2004, Jacobsen paid another $55,625.27.   On September 24, 2004, Jacobsen filed Chapter 7, and the Trustee ultimately sought to avoid all of the payments to Kiddco as preferential payments under 11 U.S.C. § 547.  The bankruptcy court dismissed the preference action as to the June 10, 2004 payment, but held that the June 29, 2004, payment was avoidable as a preference.… Read More

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