A guide, not advice. This explains how things generally work. A licensed insolvency practitioner will tell you what applies to your company or to you.
Insolvency for Construction Companies
Construction is one of the sectors most affected by insolvency. Late-paying clients, retentions, fixed-price contracts, and the impact of rising material costs make construction businesses particularly vulnerable to cash-flow pressure.
Our Manchester-based, ICAEW-licensed practitioners have extensive experience helping construction companies - main contractors, subcontractors, and specialist trades - through financial difficulty.
Why Construction Companies Fail
- Late and non-payment by clients, particularly on large contracts
- Retentions tying up cash for months or years
- Fixed-price contracts that become loss-making when costs rise
- Rising material and labour costs eroding margins
- Payment disputes and adjudication proceedings
- Supply chain failures disrupting projects
Sector-Specific Considerations
The Construction Act
The Housing Grants, Construction and Regeneration Act 1996 gives parties the right to adjudicate payment disputes quickly. This can be a powerful tool, but it also means disputes can escalate fast.
Retentions and Bondings
Retentions held by clients and bonds (performance, advance payment) can be released or called upon during insolvency, affecting the company's position.
CIS and VAT
Construction Industry Scheme (CIS) deductions and the reverse-charge VAT rules create particular tax complexities for construction companies in financial difficulty.
Your Options
- Negotiation with clients and suppliers to release cash
- CVA - restructure debts while continuing to trade and complete contracts
- Administration - protection while projects are completed or the business is sold
- CVL - orderly closure where the business is not viable
Speak to a Licensed IP
Construction insolvencies need practitioners who understand the sector. Our Manchester-based team will assess your position honestly and advise on the best route - free and confidential.