Clinton Township, MI asked in Bankruptcy, Contracts and Health Care Law for Michigan

Q: When a continuing Care Facility files Chapter 11 does it void the contract which includes return of part of entrance fee

My cousin recently left a continuing care facility that filed chapter 11 two weeks later. Per her contract she gave 60 days notice but moved out in 20. Is she obligated to pay for the remaining 40 days since she probably wont be getting the 90% of her entrance fee back that was promised in her contract?

1 Lawyer Answer
Brent T. Geers
Brent T. Geers
  • Bankruptcy Lawyer
  • Grand Rapids, MI
  • Licensed in Michigan

A: A bankruptcy alone does not void a contract. Chapter 11 is a business reorganization. Essentially someone - a trustee - takes over the business, managing its assets and liabilities. Largely, that process does not affect you the consumer.

Think about it: you have likely bought products or otherwise done business with a company going through bankruptcy already and you probably didn't even know it.

Timothy Denison agrees with this answer

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