Finding a Silver Lining for Factors in the Abeinsa Bankruptcy Case

Types : Bylined Articles

In an article from last December, I discussed the Third Circuit Court of Appeals’ decision in the Abeinsa Holding Inc. bankruptcy.¹ In that case, the Third Circuit sustained a claim objection relating to unlicensed contractor work, finding:

California law, which governs this dispute, imposes harsh, if not draconian, consequences upon unlicensed contractors who perform construction work in the state: in general, they may not recover any compensation for their services.²

In the article’s conclusion, I noted that the operable California law provided not just a shield (no payment on a claim for services performed by an unlicensed contractor) as was discussed by the Third Circuit, but also a sword (potential recovery for any payments made for services performed by an unlicensed contractor). Recently, the U.S. Bankruptcy Court for the District of Delaware addressed the sword. Fortunately, in comparison to the harsh consequences in the earlier Abeinsa decisions, this recent decision provides a silver lining to the lender.

^[1] In re Abeinsa Holding Inc., 2021 WL 3909984 (3d Cir. Sept. 1, 2021).

^[2] Id. at *1.