What happens to a real estate investment if the company you invested with goes bankrupt?

UPDATED: Oct 1, 2022

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What happens to a real estate investment if the company you invested with goes bankrupt?

Invested in a real estate company and a job they were doing. The company is now possibly going backrupt as they do not have the funds to complete the project that I invested in. What happens moving forward if the company does indeed go bankrupt? What happens to my money invested? Could I go in and pull it out? Would another company take on the job, finish it, and then I would get my principal back?

Asked on January 31, 2018 under Business Law, Massachusetts


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

In theory, you could get your money back if they don't go through with the project, but 1) you can only get money back if there is money--if the company becomes completely insolvent, you won't receive anything; and 2) if they actually file bankruptcy, you'd only get back an amount allowed/authorized by the bankruptcy process, which amount (and when you might get) will depend on the type of bankruptcy they file and the assets they have--likely, you'd only get dimes, or possibly cents, on the dollar.
As to whether another company takes over--one could, if it acquires or purchases the company you invested with, or at least this project from them. But there is no way to predict whether anyone will, under what terms, or what it mean to you.
A risk of this type of investment is the loss of your investment.

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