Separate identities – “Trust fund” conflicts often complicate the bankruptcy process

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Abstract: Several states have laws on the books stipulating that a general contractor who receives an owner payment must hold the money in trust for the subcontractors and suppliers who provided labor and materials on the project. Under the right (read: wrong) circumstances, however, these superior rights of the “trust fund” beneficiaries can be lost. This article delves into a case involving just such a dilemma. In re R. W. Leet Electric, 2007 WL 2052184 Michigan 6th Circuit (2007).