Charles Keating, the former CEO of Lincoln Savings and Loan, had a life-time dream of constructing the ultimate resort. Prior to his conviction for fraud charges in California, Keating had nearly completed his Phoenician resort. However, court records
list 61 subcontractors as being owed money, including $120,000 for metal work, $303,000 for glass and windows, $2,400,000 for electrical work, $31,000 for painting, and $18.5 million to the general contractor. There was almost $10 million left to be distributed for payments. How would the distribution be handled?
The issues are priority rights among and between mechanic's as well as whether there is a priority for the general contractor vs. the subs. Those responsible for distribution would examine the following factors:
a. When the work was done.
b. When the liens were filed.
c. The mechanisms for payment of subs and state laws on maximum paid to subs vs. general contractor.
d. Whether the general contractor had failed to pay any of the amounts that were due to the subcontractors.
e. Computation, if necessary, of pro rata shares of the subcontractors.
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