The Construction and Infrastructure Practice Group, often working with our Bankruptcy and Creditors’ Rights Group, can provide a coordinated resource for parties involved in troubled construction projects. A troubled project is one in which a key participant – such as the owner or contractor – is unable or unwilling to continue its contract obligations due to insolvency, bankruptcy or another financial reason, causing a material default. Such a default can jeopardize or doom a construction project to fail, leaving the remaining parties to sort out their conflicting rights and liabilities.

When a key project participant cannot or will not perform, but has yet to file for bankruptcy, our attorneys can assist in analyzing and developing strategies for completing the project.

Our advice may involve:

  • Termination
  • Assumption or rejection of subcontracts
  • Taking possession of materials and equipment on site
  • Liens and lien claims
  • Retainage/contract balances
  • Sureties and lenders including negotiating workouts and enforcing bond and loan documents
  • Securing the work site

In the event that a key participant files a petition in bankruptcy, our attorneys can assist with:

  • Stay relief, including enforcing or defending mechanics’ liens
  • Claims against payment and performance bonds
  • Trust fund litigation including enforcing construction trust fund statutes in bankruptcy to secure payment for subcontractors and suppliers
  • Enforcing and litigating competing priorities for unpaid contract balances and retainage
  • Preference litigation
  • Executory contracts, including negotiating the assumption or rejection of construction contracts by a trustee or debtor-in-possession as “executory contracts” under the Bankruptcy Code
  • Lien avoidance and setoff
  • Enforcement of arbitration provisions, including removing dispute resolution from the Bankruptcy Court