What happens if the builder or developer is out of business or bankrupt?

One important consideration before filing suit is to determine whether the builder or developer has any insurance, especially if that builder or developer cannot be located or is bankrupt. Determining how much insurance the builder or developer maintained from the start of construction to the time litigation is initiated is critical. However, even if a builder or developer is bankrupt, or out of business, the insurance company that issued the policy at the time of construction is still responsible to that builder or developer, and the insurance company will have to defend any claims based upon negligence, strict liability or breach of warranty. The insurance in effect when the damage is first noticed will be responsible for the damages to your property.

In the case of bankruptcy on the part of the builder or developer, it may be necessary to appear in Federal Bankruptcy court and seek to lift the bankruptcy stay. If such a motion is filed, the Federal Bankruptcy courts normally require that plaintiffs limit their recovery to available insurance coverage.

We take into consideration the time sensitivity of construction cases and work towards a rapid solution, whether through Mediation, Arbitration, Litigation or Negotiation.

Call Smith and Garg today at 1.877.517.4275 or complete our contact form and let us assist you with your construction defects needs.