A Strong Advocate For Creditors In The Construction Industry
Silverberg P.C. routinely handles cases in bankruptcy courts on Long Island and throughout New York City. Attorney Karl Silverberg has years of experience representing creditors who seek to collect money from debtors who have declared bankruptcy.
Protecting Creditors’ Rights In Bankruptcies
Bankruptcy law intersects with construction law in two ways. New York’s trust fund statute gives construction industry creditors certain protections.
- First, a debtor’s accounts receivable on a project may represent trust funds that belong to those creditors who performed work on the project. Any trust funds recovered would be distributed solely to those who worked on the project, not among all the creditors.
- Second, a corporate officer who knowingly diverts trust funds may be liable for breach of fiduciary duty, making such debt nondischargeable, meaning it will survive the bankruptcy.
Another tool for creditors, under the right circumstances, is the option of forcing a debtor into bankruptcy through an involuntary bankruptcy action. Such an action prevents the debtor from favoring one creditor over the others and allows all creditors to share the debtor’s assets pro-rata. It also helps preserve assets such as accounts receivable that require a collection action. Such receivables may be in danger of being squandered if the debtor thinks it is not worth the effort to go after such receivables if such proceeds will only go to the debtor’s creditors.
As an experienced construction law and creditors rights attorney, Karl Silverberg can help you explore all of the collection remedies available to you.