Firms who file bankruptcy petitions offer many different reasons why they are in financial peril. In a recent filing in White Plains federal court, the president of a construction firm based in Armonk, NY, blames lack of revenue for the firm's inability to pursue legal claims and recover money allegedly owed to it.
Verrino Construction Services Corp. was founded in 2000. It has operated as a contractor, subcontractor and construction manager on commercial and residential projects in Westchester and New York City. VCS filed a Chapter 11 petition asking for protection against claims that exceed $1 million. In its filing, the firm listed a total of 20 unsecured claims that total nearly $1.5 million, including $389,758 to Funding Circle USA, $239,315 to Breeze National, $193,876 to Independence Carting, and $189,331 to Chase Bank.
According to its president, VCS disputes the validity of several of these claims, but its declining revenues have prevented it from hiring attorneys to defend the claims. VCS also cited a claim for payment of $296,000 that was dismissed by a state court judge because Verrino failed to appear for his deposition. The firm's largest asset is another legal claim, this one for $890,000 against a construction bond taken out by Tishman Construction Corp. for a project for which VCS provided services. Several of VCS's subcontractors have filed mechanic's liens against VCS on this project.
The United States Trustee will be required to decide which of the debtor's claims for payment are worth pursuing. If the trustee decides that the chances of collection on a claim are slim, the claim will be abandoned. The claims against VCS are, of course, on hold pursuant to the automatic stay. Their fate will be known when the debtor files its plan of reorganization.