IG Construct: A new holistic solution for Insolvency Practitioners appointed over insolvent construction companies…… launching soon
UK Construction companies have gone out of business at the highest rate in a decade. Figures from the Insolvency Service provides that 4,280 operators unfortunately became insolvent in the 12 months to June which is 16.5% more than the same period a year ago. The rising material costs, planning delays, skill shortages and persistent cost inflation have all contributed to contractors’ financial difficulties. The number of failures in the 12 months to June were the highest since the 4,537 recorded in 2012 following the effects of the financial crisis.
FT analysis of Insolvency Service data showed the worst hit companies over the last year were smaller, specialist sub-contractors which accounted for 60% of the insolvencies in question. However, in recent months there has been an increase in insolvencies amongst larger businesses which is no doubt the knock-on effect of companies going bust further down the supply chain.
When a company goes into insolvency, insolvency practitioners will seek to maximise the realisation of assets for the creditors owed money by the company. Construction projects typically involve a long line of contractors, sub-contractors, and suppliers therefore for insolvency practitioners there are challenges of handling appointments in this field. For example, typically the industry operates on a fixed price tender basis with contracts awarded to a main contractor who manages the project but engages sub-contractors to do the work.
As the contract progresses, the scope of work can change for numerous reasons (known as variations). Therefore, alongside the lack of recording of such work, pricing and payments remain contentious. Once a company goes insolvent, all sums due are in essence a “claim” as debtors seek to minimise their loss and cost of disruption alongside exploiting the position for maximum gain. This often causes the insolvency practitioners difficulties in determining what is genuinely recoverable or not.
IG Construct is Isadore Goldman’s new bespoke service built to support insolvency practitioners appointed over an insolvent construction company. We have brought together relevant specialists and services to provide insolvency practitioners with an in house, fully integrated, full-service solution with funding available should it be required.
Our linked multiple services offering means that once appointed, we are able to support insolvency practitioners in the entire course of their work, be it from early-stage investigations to effecting a turnaround or formal insolvency. The linked services include our in-house team of quantity surveyors who will be able to support insolvency practitioners to, amongst other things, undertake an audit of the site(s) and gauge the status and financial viability of each project and seek all contracts and documentation to conduct an analysis. Coupled with our in-house adjudicators and specialist insolvency lawyers with construction expertise, we can advise on the strength of the evidence available and the likelihood of a claim being successful to ensure the recovery for creditors will be maximised.
To find out more, please contact Monica Kapur at email@example.com