A bankruptcy trustee sued the general contractor (SBCCS) and others over a failed waste paper treatment facility, claiming fraud and breach of contract. The court split the claims: construction-related disputes go to arbitration and are stayed, but claims about post-operation misconduct (hiding losses during the first 91 days) also go to arbitration. This matters because it shows courts will enforce arbitration clauses in construction contracts even in bankruptcy, but may carve out claims involving fraud or post-performance wrongdoing.
Arbitration clauses in construction contracts are enforceable and will be upheld even when disputes end up in bankruptcy court
Claims about construction defects, performance failures, and fraud during the building phase are typically arbitrable and won't proceed in court
Post-completion operational claims (like hiding losses or manipulating financial results) may also be arbitrable if they relate to contractual performance obligations