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.

Deciding the ownership of a bankrupt’s belongings

The case of Wood v Lowe and Others [2015] concerned a bankrupt’s fight to keep a valuable collection of his Beatles memorabilia out of his creditors’ hands. The Chancery Division ruled that the Beatles memorabilia, among other things, had not been gifted to the bankrupt’s wife and daughter but that it belonged to the bankrupt and therefore vested in his trustee in bankruptcy.

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.
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