One Reason to Enforce Payment Bond and Mechanic's Lien Rights Promptly

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There are many reasons why a party to a construction project should promptly file a payment bond claim or a mechanic's lien claim when those rights mature. The U.S. Court of Appeals for the Fourth Circuit recently emphasized this point in the bankruptcy context. In United Rentals, Inc. v. Angell, the Fourth Circuit upheld a bankruptcy court judgment allowing a bankruptcy trustee to avoid and recover $66,963.74 as preferential payments made by Partitions Plus of Wilmington, Inc. to United Rentals, Inc. during the 90 days prior to Partitions' bankruptcy petition. At issue was United's failure to make a payment bond or mechanic's lien claim prior to receiving Partitions' payments, which the Fourth Circuit determined was fatal to United's argument that the payments

were contemporaneous exchanges for new value because they extinguished United's right to enforce its claims. Jack B. Boyd of Ober|Kaler takes a look at the case.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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