Contractors must understand rights to minimize exposure to bankruptcy of owners, subcontractors

12/7/2011 | (free registration)

It's important for contractors to understand the law to protect themselves from the bankruptcies of subcontractors or owners, according to a construction lawyer and a bankruptcy lawyer. It is possible, for example, to take action with regards to a subcontractor's performance bond if a subcontractor files for bankruptcy, they write. "If the contractor no longer wishes to do business with the subcontractor and grounds exist to terminate the contract, the contractor should act quickly to terminate the contract prior to the bankruptcy filing," they advise.

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