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The Fourth Circuit Court of Appeals recently ruled in the case of In re Construction Supervision Services that the property interest underlying a subcontractor’s lien on funds arises from the date it first furnishes labor or materials to a construction project.  The timing of when an interest in property arises is critical as it could allow, as it did here, a subcontractor to prime a lender’s perfected lien on accounts receivable when notice was not served until after the debtor filed bankruptcy.  This alert briefly describes the decision’s impact on the constru

By order issued on February 23, 2012, the United States District Court for the Eastern District of North Carolina vacated the bankruptcy court’s decision in In re Mammoth Grading, Inc.  This decision and the companion decision in In re Harrelson Utilities, Inc. held that the lien rights of construction subcontractors and suppliers cannot be perfected once a bankruptcy petition is filed by a party higher in the contract chain.