Insolvency in the construction industry - Revision history

Editor at 10:21, 10 January 2025

2025-01-10T10:21:29Z

← Older revision		Revision as of 10:21, 10 January 2025
Line 86:		Line 86:
	* Instruct the QS to prepare a detailed valuation of the completed work and an inventory of materials and equipment		* Instruct the QS to prepare a detailed valuation of the completed work and an inventory of materials and equipment
	* Termination of the contractor’s employment under the contract at any time by notice. Written notice is required, delivered by hand, special or recorded delivery. Termination effective with immediate effect upon the contractor receiving the notice. Contractor’s obligations to carry out and complete the works are suspended		* Termination of the contractor’s employment under the contract at any time by notice. Written notice is required, delivered by hand, special or recorded delivery. Termination effective with immediate effect upon the contractor receiving the notice. Contractor’s obligations to carry out and complete the works are suspended
−	* Withhold any payments to the contractor. Employer is not obliged to make any further payments or release monies if Termination is in effect. If ~~anthe~~ interim certificate has recently been issued, it is advised to issue a withholding notice	+	* Withhold any payments to the contractor. Employer is not obliged to make any further payments or release monies if Termination is in effect. If an interim certificate has recently been issued, it is advised to issue a withholding notice
	* Contact key sub-contractors, suppliers and commence discussions about continuation contracts.		* Contact key sub-contractors, suppliers and commence discussions about continuation contracts.
	* Begin the process of engaging a new contractor to proceed with the works		* Begin the process of engaging a new contractor to proceed with the works
Line 97:		Line 97:
	Historically, administrative receivership was a widely used insolvency process, granting the holders of floating charges the power to appoint a receiver. An administrative receiver's principal duty is to realise the indebtedness owed to the creditor by whom they were appointed by disposing of assets. In practice, this remedy is now much less common following the enactment of the Enterprise Act 2000.		Historically, administrative receivership was a widely used insolvency process, granting the holders of floating charges the power to appoint a receiver. An administrative receiver's principal duty is to realise the indebtedness owed to the creditor by whom they were appointed by disposing of assets. In practice, this remedy is now much less common following the enactment of the Enterprise Act 2000.

−	--~~---~~	+	== Pre-pack administration ==
		+
		+	When a company goes into administration or liquidation, the administrator or liquidator will try and get in as much money as possible to pay creditors. Sometimes the best offer will be from the former directors or owners to buy back part or all of the business, including the company’s name or trading name. This is sometimes called a ‘pre-pack’ administration. The law allows this. However, generally, when a company enters liquidation (this is often referred to as being wound up), insolvency law restricts who can reuse the company’s registered name and trading names.
		+
	== Winding up / compulsory liquidation ==		== Winding up / compulsory liquidation ==

Editor at 09:07, 10 January 2025

2025-01-10T09:07:57Z

← Older revision		Revision as of 09:07, 10 January 2025
Line 7:		Line 7:
	This article aims to provide a general overview of a highly complex area of law, and does not constitute legal advice. Any reader wishing for further information should consult a practitioner textbook or seek legal advice.		This article aims to provide a general overview of a highly complex area of law, and does not constitute legal advice. Any reader wishing for further information should consult a practitioner textbook or seek legal advice.

−	= Bankruptcy/individual insolvency =	+	= Bankruptcy / individual insolvency =

	A person is made bankrupt when a bankruptcy order is made by a court following the presentation of a bankruptcy petition. An individual may petition for their own bankruptcy where they are unable to pay their debts, or alternatively a petition may be presented by an individual’s creditor, or more than one creditor acting jointly.		A person is made bankrupt when a bankruptcy order is made by a court following the presentation of a bankruptcy petition. An individual may petition for their own bankruptcy where they are unable to pay their debts, or alternatively a petition may be presented by an individual’s creditor, or more than one creditor acting jointly.
Line 56:		Line 56:
	# Administration.		# Administration.
	# Receivership.		# Receivership.
−	# Winding up.	+	# Winding up also calles compulsory liquidation.

	== Company voluntary arrangements (CVAs) ==		== Company voluntary arrangements (CVAs) ==
Line 100:		Line 100:
	== Winding up / compulsory liquidation ==		== Winding up / compulsory liquidation ==

−	A registered company may be wound up either by court order or voluntarily. A court may wind up a company upon presentation of a petition on one of a variety of grounds, including, inter alia, that it is unable to pay its debts.	+	A registered company may be wound up either by court order or voluntarily. A court may wind up a company upon presentation of a winding up petition on one of a variety of grounds, including, inter alia, that it is unable to pay its debts.

	A company is deemed unable to pay its debts if (inter alia):		A company is deemed unable to pay its debts if (inter alia):
Line 109:		Line 109:
	# The company's assets are less than its liabilities.		# The company's assets are less than its liabilities.

−	As with bankruptcy detailed rules as to procedure and the form and service of demands and petitions must be followed. Persons served with the petition may appear at the hearing if they have given notice and may support or oppose the petition.	+	As with bankruptcy detailed rules as to procedure and the form and service of demands and petitions must be followed. Persons served with the petition may appear at the hearing if they have given notice and may support or oppose the petition. The rules for England, Wales and Scotland may differ so it is worth researching the relevant process.

	== Liquidation ==		== Liquidation ==

Editor at 08:55, 10 January 2025

2025-01-10T08:55:08Z

← Older revision		Revision as of 08:55, 10 January 2025
Line 98:		Line 98:

	-----		-----
−	== Winding up ==	+	== Winding up / compulsory liquidation ==

	A registered company may be wound up either by court order or voluntarily. A court may wind up a company upon presentation of a petition on one of a variety of grounds, including, inter alia, that it is unable to pay its debts.		A registered company may be wound up either by court order or voluntarily. A court may wind up a company upon presentation of a petition on one of a variety of grounds, including, inter alia, that it is unable to pay its debts.
Line 134:		Line 134:
	This article was originally created by --[[User:Alistair_Cantor\|Alistair Cantor]].		This article was originally created by --[[User:Alistair_Cantor\|Alistair Cantor]].

−	= Related articles on Designing Buildings ~~Wiki~~ =	+	= Related articles on Designing Buildings =

	* Business interruption cover under COVID-19.		* Business interruption cover under COVID-19.

Designing Buildings at 14:33, 15 December 2020

2020-12-15T14:33:39Z

← Older revision		Revision as of 14:33, 15 December 2020
Line 148:		Line 148:
	* Prompt payment.		* Prompt payment.
	* Remedies for late payment.		* Remedies for late payment.
		+	* Resolution planning.
	* Scheme for construction contracts.		* Scheme for construction contracts.
	* Solvency.		* Solvency.

Editor at 13:49, 8 October 2020

2020-10-08T13:49:31Z

← Older revision		Revision as of 13:49, 8 October 2020
Line 136:		Line 136:
	= Related articles on Designing Buildings Wiki =		= Related articles on Designing Buildings Wiki =

		+	* Business interruption cover under COVID-19.
	* Campaign for cash retentions reform.		* Campaign for cash retentions reform.
	* Carillion.		* Carillion.

Designing Buildings at 11:47, 15 September 2020

2020-09-15T11:47:14Z

← Older revision		Revision as of 11:47, 15 September 2020
Line 151:		Line 151:
	* The Late Payment of Commercial Debts Regulations 2013.		* The Late Payment of Commercial Debts Regulations 2013.

−	[[Category:~~Other_legislation~~]] [[Category:DCN_Legislation]]	+	[[Category:DCN_Definition]] [[Category:DCN_Guidance]] [[Category:DCN_Legislation]] [[Category:Other_legislation]]

Editor at 21:14, 17 October 2019

2019-10-17T21:14:35Z

← Older revision		Revision as of 21:14, 17 October 2019
Line 145:		Line 145:
	* New regulations on late payment.		* New regulations on late payment.
	* Profitability.		* Profitability.
		+	* Prompt payment.
	* Remedies for late payment.		* Remedies for late payment.
	* Scheme for construction contracts.		* Scheme for construction contracts.
Line 150:		Line 151:
	* The Late Payment of Commercial Debts Regulations 2013.		* The Late Payment of Commercial Debts Regulations 2013.

−	[[Category:Other_legislation]]	+	[[Category:Other_legislation]] [[Category:DCN_Legislation]]

Editor at 11:49, 15 March 2019

2019-03-15T11:49:39Z

← Older revision		Revision as of 11:49, 15 March 2019
Line 134:		Line 134:
	This article was originally created by --[[User:Alistair_Cantor\|Alistair Cantor]].		This article was originally created by --[[User:Alistair_Cantor\|Alistair Cantor]].

−	~~= Find out more =~~	+	= Related articles on Designing Buildings Wiki =
−		+
−	=== Related articles on Designing Buildings Wiki ===	+

		+	* Campaign for cash retentions reform.
	* Carillion.		* Carillion.
	* Cash flow statement.		* Cash flow statement.

Designing Buildings at 10:07, 31 December 2018

2018-12-31T10:07:19Z

← Older revision		Revision as of 10:07, 31 December 2018
Line 81:		Line 81:
	You must act quickly, following measure which need to be discussed with the design team.		You must act quickly, following measure which need to be discussed with the design team.

−	* Advise the client of contractor insolvency, ~~contractural~~ position and recommended action	+	* Advise the client of contractor insolvency, contractual position and recommended action
	* Go to site, secure site and materials and change the locks		* Go to site, secure site and materials and change the locks
	* Get in touch with administrative receiver		* Get in touch with administrative receiver
	* Instruct the QS to prepare a detailed valuation of the completed work and an inventory of materials and equipment		* Instruct the QS to prepare a detailed valuation of the completed work and an inventory of materials and equipment
	* Termination of the contractor’s employment under the contract at any time by notice. Written notice is required, delivered by hand, special or recorded delivery. Termination effective with immediate effect upon the contractor receiving the notice. Contractor’s obligations to carry out and complete the works are suspended		* Termination of the contractor’s employment under the contract at any time by notice. Written notice is required, delivered by hand, special or recorded delivery. Termination effective with immediate effect upon the contractor receiving the notice. Contractor’s obligations to carry out and complete the works are suspended
−	* Withhold any payments to the contractor. Employer is not obliged to make any further payments or release monies if Termination is in effect. If ~~the~~ interim certificate has recently been issued, it is advised to issue a withholding notice	+	* Withhold any payments to the contractor. Employer is not obliged to make any further payments or release monies if Termination is in effect. If anthe interim certificate has recently been issued, it is advised to issue a withholding notice
	* Contact key sub-contractors, suppliers and commence discussions about continuation contracts.		* Contact key sub-contractors, suppliers and commence discussions about continuation contracts.
	* Begin the process of engaging a new contractor to proceed with the works		* Begin the process of engaging a new contractor to proceed with the works
	* Check the contract for Bonds or Parent Company Guarantees (PCG).		* Check the contract for Bonds or Parent Company Guarantees (PCG).
−	* Get in ~~tough~~ with administrative receiver or liquidator and client about their views with regard to project completion	+	* Get in touch with administrative receiver or liquidator and client about their views with regard to project completion
−	* Keep record of all time spent - it is normal for additional fees to be charged in this respect	+
	* Ensure that the project is insured and that the insurance obligations have been fulfilled/ complied with		* Ensure that the project is insured and that the insurance obligations have been fulfilled/ complied with
−
−	~~How do you complete the works?~~
−
−	* Continuation with original contractor - only practical if works are nearing completion
−	* Assignment or Novation of the contract
−	* Appointing a new contractor to complete the project - completely new contract

	== Administrative receivership ==		== Administrative receivership ==
Line 133:		Line 126:

	Business Minister Kelly Tolhurst said: “While the vast majority of UK companies are run responsibly, some recent large-scale business failures have shown that a minority of directors are recklessly profiting from dissolved companies. This can’t continue. That is why we are upgrading our corporate governance to give new powers to authorities to investigate and hold responsible directors who attempt to shy away from their responsibilities, help protect workers and small suppliers and ensure the UK remains a great place to work, invest and do business.”		Business Minister Kelly Tolhurst said: “While the vast majority of UK companies are run responsibly, some recent large-scale business failures have shown that a minority of directors are recklessly profiting from dissolved companies. This can’t continue. That is why we are upgrading our corporate governance to give new powers to authorities to investigate and hold responsible directors who attempt to shy away from their responsibilities, help protect workers and small suppliers and ensure the UK remains a great place to work, invest and do business.”
−
−

	Further measures are due to be set out in Autumn 2018.		Further measures are due to be set out in Autumn 2018.
Line 141:		Line 132:

	-----		-----
−	This article was created by --[[User:Alistair_Cantor\|Alistair Cantor]].	+	This article was originally created by --[[User:Alistair_Cantor\|Alistair Cantor]].

	= Find out more =		= Find out more =

Rhea1910 at 20:49, 30 December 2018

2018-12-30T20:49:48Z

← Older revision		Revision as of 20:49, 30 December 2018
Line 62:		Line 62:
	These reflect the same procedures and aims as for IVAs. The directors of a company may put forward a proposal to creditors, or alternatively, if the company or partnership is already in administration or being wound up by the receiver or liquidator. As with IVAs, a meeting of creditors is held and if 75% of creditors by value vote in favour, the CVA is adopted.		These reflect the same procedures and aims as for IVAs. The directors of a company may put forward a proposal to creditors, or alternatively, if the company or partnership is already in administration or being wound up by the receiver or liquidator. As with IVAs, a meeting of creditors is held and if 75% of creditors by value vote in favour, the CVA is adopted.

		+	-----
	== Administration ==		== Administration ==

Line 75:		Line 76:

	Administration ends 1 year after the initial order is made, although this period may be extended in certain circumstances or indeed may end earlier where the purposes of administration have been already met.		Administration ends 1 year after the initial order is made, although this period may be extended in certain circumstances or indeed may end earlier where the purposes of administration have been already met.
		+
		+	Contractor has gone into administration receivership, what do you do?
		+
		+	You must act quickly, following measure which need to be discussed with the design team.
		+
		+	* Advise the client of contractor insolvency, contractural position and recommended action
		+	* Go to site, secure site and materials and change the locks
		+	* Get in touch with administrative receiver
		+	* Instruct the QS to prepare a detailed valuation of the completed work and an inventory of materials and equipment
		+	* Termination of the contractor’s employment under the contract at any time by notice. Written notice is required, delivered by hand, special or recorded delivery. Termination effective with immediate effect upon the contractor receiving the notice. Contractor’s obligations to carry out and complete the works are suspended
		+	* Withhold any payments to the contractor. Employer is not obliged to make any further payments or release monies if Termination is in effect. If the interim certificate has recently been issued, it is advised to issue a withholding notice
		+	* Contact key sub-contractors, suppliers and commence discussions about continuation contracts.
		+	* Begin the process of engaging a new contractor to proceed with the works
		+	* Check the contract for Bonds or Parent Company Guarantees (PCG).
		+	* Get in tough with administrative receiver or liquidator and client about their views with regard to project completion
		+	* Keep record of all time spent - it is normal for additional fees to be charged in this respect
		+	* Ensure that the project is insured and that the insurance obligations have been fulfilled/ complied with
		+
		+	How do you complete the works?
		+
		+	* Continuation with original contractor - only practical if works are nearing completion
		+	* Assignment or Novation of the contract
		+	* Appointing a new contractor to complete the project - completely new contract

	== Administrative receivership ==		== Administrative receivership ==
Line 80:		Line 104:
	Historically, administrative receivership was a widely used insolvency process, granting the holders of floating charges the power to appoint a receiver. An administrative receiver's principal duty is to realise the indebtedness owed to the creditor by whom they were appointed by disposing of assets. In practice, this remedy is now much less common following the enactment of the Enterprise Act 2000.		Historically, administrative receivership was a widely used insolvency process, granting the holders of floating charges the power to appoint a receiver. An administrative receiver's principal duty is to realise the indebtedness owed to the creditor by whom they were appointed by disposing of assets. In practice, this remedy is now much less common following the enactment of the Enterprise Act 2000.

		+	-----
	== Winding up ==		== Winding up ==

Line 109:		Line 134:
	Business Minister Kelly Tolhurst said: “While the vast majority of UK companies are run responsibly, some recent large-scale business failures have shown that a minority of directors are recklessly profiting from dissolved companies. This can’t continue. That is why we are upgrading our corporate governance to give new powers to authorities to investigate and hold responsible directors who attempt to shy away from their responsibilities, help protect workers and small suppliers and ensure the UK remains a great place to work, invest and do business.”		Business Minister Kelly Tolhurst said: “While the vast majority of UK companies are run responsibly, some recent large-scale business failures have shown that a minority of directors are recklessly profiting from dissolved companies. This can’t continue. That is why we are upgrading our corporate governance to give new powers to authorities to investigate and hold responsible directors who attempt to shy away from their responsibilities, help protect workers and small suppliers and ensure the UK remains a great place to work, invest and do business.”

−	~~Contractor has gone into administration receivership, what do you do?~~

−	~~You must act quickly, following measure which need to be discussed with the design team.~~
−
−	* Advise the client of contractor insolvency, contractural position and recommended action
−	* Go to site, secure site and materials and change the locks
−	* Get in touch with administrative receiver
−	* Instruct the QS to prepare a detailed valuation of the completed work and an inventory of materials and equipment
−	* Termination of the contractor’s employment under the contract at any time by notice. Written notice is required, delivered by hand, special or recorded delivery. Termination effective with immediate effect upon the contractor receiving the notice. Contractor’s obligations to carry out and complete the works are suspended
−	* Withhold any payments to the contractor. Employer is not obliged to make any further payments or release monies if Termination is in effect. If the interim certificate has recently been issued, it is advised to issue a withholding notice
−	* Contact key sub-contractors, suppliers and commence discussions about continuation contracts.
−	* Begin the process of engaging a new contractor to proceed with the works
−	* Check the contract for Bonds or Parent Company Guarantees (PCG).
−	* Get in tough with administrative receiver or liquidator and client about their views with regard to project completion
−	* Keep record of all time spent - it is normal for additional fees to be charged in this respect
−	* Ensure that the project is insured and that the insurance obligations have been fulfilled/ complied with
−
−	~~How do you complete the works?~~
−
−	* Continuation with original contractor - only practical if works are nearing completion
−	* Assignment or Novation of the contract
−	* Appointing a new contractor to complete the project - completely new contract

	Further measures are due to be set out in Autumn 2018.		Further measures are due to be set out in Autumn 2018.