Insolvency & restructuring

Main contractor insolvency – contract quick guide

In light of the recent Carillion demise, this guide provides a starting point on common forms of contract for both employers and subcontractors looking at how insolvency affects the supply chain from both directions. The table below is a quick reference for the processes in the main contract and subcontracts for the scenario where the main building contractor has gone bust.

Be aware of void property transactions if seller is insolvent

There is always the risk with any property transaction that the seller could be selling at an under value because they are in financial difficulties and need a quick sale. If a pending winding up or bankruptcy petition is presented against the seller before the sale has completed, and which later results in a winding up or bankruptcy order, then the sale will be void – a fact the buyers are unlikely to know.

Retrieving goods from an insolvent distributor

The key to retrieving goods if a distributor has become insolvent is fast action. Give the Insolvency Practitioner evidence that you own the goods and ask for permission to enter the distributor's premises in order to identify and list all your goods stored there. If you cannot resolve matters quickly and the IP will not allow you to remove your goods, you will need to apply to the Court to obtain a court order so that you can either be compensated for your loss or to enable your claim to be treated as an expense of the administration and thus be paid.
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