The VBA Journal is the official publication of The Virginia Bar Association.
Issue link: http://vba.epubxp.com/i/436865
WINTER 2014 - 2015 • 31 W I N T E R 2 0 1 4 - 2 0 1 5 • 3 1 chain of contract. On residential projects, for example, if a mechanic's lien agent is listed on the building permit, your client needs to give notice to that lien agent at the start of the project. You should ensure that your client has proce- dures in place to give proper notice to the required parties. 5) Keep in mind, however, that once the bankruptcy court enters an order granting relief from the automatic stay or once the bankruptcy case is dismissed or the stay otherwise terminated, a lien claimant's statute of limitations to fle the suit recommences. Te lien claimant will have the longer of (1) whatever time is left on the original six-month statute of limitation or (2) 30 days from the order granting relief from the stay. 10 What Should Owners Do When a Company Downstream Files Bankruptcy? 1) Quickly determine the payment status and how many subcontractors and suppliers have not been paid. Owners need to determine who has mechanic's lien rights, claims directly against the owner, or other claims besides general unsecured claims. Owners should determine how to get any mechanic's liens or other payment issues resolved. Te au- tomatic stay and the bankruptcy fling in general will often alter the rights and remedies of owners, and owners want to make sure they don't end up paying twice. 2) Quickly get a handle on any open or unfnished proj- ects with the bankrupt entity. Protect your client by taking steps to ensure that the project continues and that the work is protected. 3) Items two and three will help owners determine whether they have claims against the general contractor that can be of- set. 4) Urge the general contractor, through contractual remedies or otherwise, to bond of or settle all liens, if possible. Conclusion Each case is unique and should be handled on a case-by-case basis. It is important to develop a case-specifc strategy and ensure that you take the proper steps after a bankruptcy is fled to avoid violating the automatic stay or having to pay twice. ■ 1. Carolina Builders Corp. v. Cenit Equity Co., 257 Va. 405, 411, 512 S.E.2d 550, 552 (1999). 2. Id. ("[U]nless [a mechanic's lien] is perfected within the proper time and in the proper manner, as outlined by the statute, it is lost.") 3. Va. Code Ann. § 43-4. 4. Id. 5. Va. Code Ann. § 43-17. 6. 11 USC § 362(a)(4). 7. In re Concrete Structures, Inc., 261 B.R. 627, 637 (E.D. Va. 2001); In re Bain, 64 B.R. 581, 583 (W.D. Va. 1986); In re Richardson, 123 B.R. 736, 738 (Bankr. W.D. Va. 1991). 8. In re Concrete Structures, Inc., 261 B.R. at 642. 9. 11 U.S.C. § 362. 10. In re Concrete Structures, Inc., 261 B.R. at 645-46. Alex Burnett is a partner at Williams Mullen in Richmond who focuses his practice on con- struction litigation, bankruptcy and creditors' rights and real estate litigation. He joined the VBA in 2005 and serves on the Construction and Public Contracts Law Section Coun- cil. In 2014, he received the VBA Young Lawyers Division Sandra P. Tompson Award for outstanding work and exceptional long-term service. Andy O. Mathews is an associate at Williams Mullen in Richmond. His practice concen- trates on complex commercial litigation matters, with an emphasis in construction and com- mercial real estate disputes. He joined the VBA in 2009 after earning a law degree from the University of Richmond School of Law, where he was a member of the Law Review. Endnotes