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Construction Insolvencies



Why your Clients may still have contractual remedies… Many Construction Companies entering Administration or failing completely have contractual relationships with their Client base. In many cases, there are still remedies to collect outstanding debt even though the initial position may seem bleak. There are several situations that regularly arise and how an Expert Construction specialist may significantly enhance the recovery of outstanding Debts to the benefit of those owed money. Construction Insolvency is an area fraught with complication and difficulties. Notwithstanding having to establish a realistic assessment of Creditors and Debtors the ‘live’ and completed contract debts create an administrative burden that at face value may appear very difficult to realise. Moreover, a collapse of cash flow due to a problem contract that appears to be the catalyst for the failure can present an ‘open and shut’ case for failure. However, there are more and more instances where Companies face Liquidation on the basis that the contract between them and the Payor may have been improperly administrated by that Payor to the detriment of your Client. It is not uncommon for some unscrupulous businesses or individuals to force a company into failure in order to mask shortcomings in their own conduct or their own commercial position. Some of the most regular contractual abuses are;

  • FAILURE TO PAY SUMS PROPERLY DUE AND OWING

Maladministration and/or late payment are regular reasons why Contractors and Sub–Contractors fail. The Construction Act prescribes a series of remedies that can be easily Adjudicated within a series of weeks.

  • WRONGFUL TERMINATION

The Termination of Contractors and Sub - Contractors under a construction contract is a matter that requires very specific and correctly administered procedures. Otherwise, the Terminating party getting it wrong may leave itself open to damages via a repudiatory breach.

  • FAILURE TO RELEASE RETENTIONS

Retentions are a simply calculated aged debt and provided that there are good records including the original contract and a Final Account Statement these are still readily collectable. In many cases, the ‘wronged’ party has little recourse to recover sums properly owed as they have no cash to fight their cause, and once in 'Administration' the attitude of many Directors is ‘’that’s it – we can’t recover my money’’. In addition, some Administrators do not have the time or knowledge to unpick pre-existing disputes and understand the strength of their Client’s case. However, Companies in Administration have a whole series of options to recover the cash owed which may offer the possibility of recovery or a ‘new start’ through a re-structure. 'Adjudications' can be brought in Administration and the process is far simpler and time –effective than most Administrators realise. The process is covered by a Statutory Framework and decisions are binding and enforceable. In this context Administrators and Liquidators still have options to pursue construction claims effectively and efficiently where there may be very good prospects of recovering sums due and payable from Debtors.

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For further details of CIBER Limited’s experience in these areas including NON –RECOURSE funding options on a ‘NO WIN, NO FEE’ basis, please contact Chris Bates chris@ciber.group or Mark Goodall mark@ciber.group

All cases will be considered on its merits and the first consultation is free.

Copyright © 2021 CIBER LIMITED, All rights reserved. Our mailing address is: CIBER LIMITED Gresham House 24 Holborn Viaduct London, London EC1A 2BN United Kingdom Information contact details in this email have been gathered from public records

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