NDP Solicitors offer a FREE initial discussion, on the phone or over a coffee, if you have a Construction Insolvency dispute or problem, in particular where:
- Your client contractor is facing insolvency
- Your client has not been paid
- Your client is considering suspending work
- You wish to terminate a construction contract
- The employer is trying to exercise rights of set-off
Click here for case studies and testimonials about our work in the area of regulatory disputes. Call us on 0121 200 7040 or contact us online. We often agree to work on affordable fixed fees, anywhere in the UK.
Contractual tension often leads to Construction Insolvency Disputes and problems
In the David and Goliath world of chains of construction contracts it is easy to find stresses and contractual power imbalances. Slow payment, mismanagement and overcharging are endemic, put projects in jeopardy and expose the parties to the risk of financial collapse and insolvency.
Much has been done in the last 15 years through the Construction Acts to address power imbalances by the introduction of a statutory right to take a dispute to adjudication within a 35 day period, by imposing a system of notices to withhold payment, failing which no withholding is lawful and with the ability by service of a notice to suspend works for reasons of non payment and no risk of liquidated damages or compensation claims. The message from the legislation is ‘pay now and litigate or arbitrate later’.
However it is very easy as a contractor or subcontractor when being starved of cash to decide to cease work before serving the necessary notices to suspend work. Such a failure will almost certainly amount to a breach of contract and create a counterclaim putting at risk the collection of any outstanding book debts.
There can be some surprising results where construction legislation and insolvency legislation meet. An Insolvency Practitioner advising a cash strapped contractor or subcontractor should not give up hope of payment under the construction contract until there has been a detailed consideration as to whether the lawfully required notices to justify non payment under construction legislation have been served by the Employer client.
Great care needs to be applied to this analysis. If applications for payment of work carried out have been made by your client as subcontractor or contractor and no notice of withholding or no pay less notice has been served then the application for payment by your client may amount to an undisputed debt irrespective of whether there might otherwise be a ground to avoid its payment and it would then be possible for your client to threaten to wind up the non paying party on the basis of the unpaid debt.
Such a threat will have huge potential adverse consequences for the non paying client or main contractor who once a Petition is presented may find that its main contract with its client will have become automatically terminated by reason of its breach in allowing a petition to be presented.
We advise on the following areas of Construction Industry Disputes and Problems:
- The Housing Grants Construction and Regeneration Act 1996 and Insolvency Law.
- Novation of contracts by Insolvency Practitioners
- Completion by Insolvency Practitioners.
- Advice on completing contracts where employer has become insolvent.
- Advice on contractual and tortious liability of construction professionals under building and engineering contracts.
- Managing project difficulties caused by defects in design and budget overruns.
- Advice to contractors experiencing employer insolvency.
- Advising Liquidators and Administrators in promoting business rescue.
- Investigating the causes of insolvency and its effect on parties to a construction project.
- Advising on recovery strategies for and against contractors, subcontractors and construction professionals.
- Suspending works without terminating contracts.
- Suspending payments.
- Recovering payments.
- Seeking payment of final accounts.
We also advise on:
- Enforcing construction and retention trusts, escrow accounts and security bonds.
- Advise on rights of set-off abatement and deduction.
- Enforcing bonds and guarantees.
- Terminating contracts without creating a liability.
- Enforcing collateral warranties.
- Protecting cash flow by contracting out of set-off.
- Step-in agreements.
- Completion by guarantors.
- Advising on payment, retention of title, delivery up and time and expense claims.
- Recovering plant and equipment, goods and materials.
- Advice on adjudication and enforcement of adjudicator’s decisions.