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Navigating Lien and Trust Fund Rights (DR)
Most states have enacted mechanics’ liens in favor of creditors that provide goods and/or services on construction projects. Some states have also enacted, and parties in the construction supply chain can agree to, trust fund protection in amounts owing to general contractors and subcontractors. This program focuses on a creditor’s ability to maintain and enforce its mechanics’ lien and construction or builders trust fund rights where a customer in the construction supply chain files for bankruptcy. The speakers will discuss the impact of the automatic bankruptcy stay and other provisions of the Bankruptcy Code on mechanics’ lien rights. The speakers will then discuss the impact of the local mechanic’s lien statute on a creditor’s ability to maintain and enforce its mechanics lien rights in its customer’s bankruptcy case. Also, there will be a discussion of the superior status conferred upon the beneficiaries of a construction or builders trust fund that increases the likelihood of payment of their claims. Finally, creditors’ ability to invoke their lien or trust fund status as a defense to preference claims will be discussed.
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