The meeting of creditors is administered by the bankruptcy trustee appointed by the Bankruptcy Court. The trustees are lawyers appointed by the Court. At the meeting of creditors, the trustee will inquire about the asset picture of the company. Thereafter, homeowner victims, and subcontractors and suppliers if they are due money, have the opportunity to ask follow up questions regarding assets. Some trustees will give latitude to victims to use the meeting of creditors as a venting session. It is not a requirement that victims attend. Their non-attendance will not prejudice them in making a claim in bankruptcy.
It is doubtful that homeowner victims will get much if any relief in the bankruptcy proceeding. Where they may find relief is with the State Homeowners Construction Industry Recovery Fund. However, the Recovery Fund statute has its peculiarities. First, the homeowner has to attest to their intent to live in the home being constructed for more than six months a year. Second, the homeowner must first either secure a judgment in circuit court and be unable to collect it or pursue a bankruptcy claim to finality. Third, the amount awardable to an individual homeowner is capped at $50,000. Fourth, the amount awardable in gross for a particular homebuilder is capped at $500,000. Fifth, the Fund operates on a first-come, first-serve basis. This means if the first ten qualified claims each exceed the $50,000 cap and the $50,000 is awarded to those first ten as a result, everyone else who is a victim of that homebuilder is out of luck. Sixth, the claims' process is not easy to navigate. Seventh, when the State Fund runs low, the Fund administrators slow the processing of claims. It could take a couple of years before a qualified claim is actually awarded.
With the $500,000 per homebuilder cap under the Recovery Fund, where there is a mass default as seems to be the case here, homeowner victims by design are obliged to compete with each other to get their claims qualified ahead of each other's. This makes it impossible under normal circumstances for a law firm to take on the representation of multiple homeowner victims. Our firm has a solution to that. We have developed a program in these mass default situations for victim homeowners to move as a group and agree that whatever may be awarded to any member of the group will be shared among the group members. For a homeowner who joins the group process, our firm, on a contingency fee basis, files the bankruptcy claim for each group member and then processes the Recovery Fund claim coming out of the bankruptcy proceeding. As the recovery is awarded, our firm splits net proceeds between the group members.