NH Bankruptcy Case Win by Drummond Woodsum Benefits Construction Companies’ Payment Rights
The MacMillin Company wins the right to be paid first in a bankruptcy case – setting new precedents in New Hampshire bankruptcy law.
In August 2021, Prospect-Woodward, a not-for-profit corporation that owned a retirement facility in Keene, New Hampshire, filed for bankruptcy, leaving The MacMillin Company and its subcontractors to file a mechanics lien in order to be paid for construction work performed.
New Hampshire is a “race-notice” jurisdiction, meaning that a “purchaser or creditor has the senior claim if he or she records without notice of a prior unrecorded interest.” In other states, the bank that recorded the mortgage would have the senior claim, so UMB Bank, N.A., the mortgager, assumed they would have the senior claim.
Attorney Jeremy Fischer of Drummond Woodsum Law firm was retained by The MacMillin Company (now DEW Construction) to dispute that claim.
“For a small business like The MacMillin Company, the loss of almost $6M would have been devastating, so we began our research at the onset of construction, making sure no facts were left unreviewed. Digging into past case law, Jeremy and his team found that construction payment priorities under certain circumstances were supported by older case law opinions. And the court ultimately agreed.
In addition, the work-start and notice date by The MacMilin Company was clearly before the mortgager had filed, giving the ”first-position” argument by Drummond Woodsum more weight. The work-start date had been moved ahead to accommodate the New Hampshire tree bat mating season, which all parties had knowledge of beforehand.