Receiver Can Complete Construction Project Despite Owner’s Bankruptcy Filing

Chairman and CEO Andy Kassner and Philadelphia and Wilmington associate Joe Argentina authored an article in The Legal Intelligencer titled “Receiver Can Complete Construction Project Despite Owner’s Bankruptcy Filing.” The article outlines the details of In Re Packard Square, LLC, a case in which the U.S. Bankruptcy Court for the Eastern District of Michigan concluded that despite the debtor’s bankruptcy filing, a state court-appointed receiver should remain in possession and control of the debtor’s property to complete construction of the project, lease it and even sell it under supervision of the state court.

In this case, there was extensive pre-bankruptcy litigation and rulings by the state court, the assets of the estate were being appropriately administered by a fiduciary under the supervision of another court, and the debtor decided after 10 months of state court proceedings to carry on the battle in bankruptcy court. By not filing a Chapter 11 case prior to appointment of a receiver, or at least prior to the receiver taking possession of the project, the debtor risks being forced to resolve the dispute and disposition of its property outside of the bankruptcy process.