Rely on the most comprehensive, up-to-date legal content designed and curated by lawyers for lawyers
Work faster and smarter to improve your drafting productivity without increasing risk
Accelerate the creation and use of high quality and trusted legal documents and forms
Streamline how you manage your legal business with proven tools and processes
Manage risk and compliance in your organisation to reduce your risk profile
Stay up to date and informed with insights from our trusted experts, news and information sources
Access the best content in the industry, effortlessly — confident that your news is trustworthy and up to date.
With over 30 practice areas, we have all bases covered. Find out how we can help
Our trusted tax intelligence solutions, highly-regarded exam training and education materials help guide and tutor Tax professionals
Regulatory, business information and analytics solutions that help professionals make better decisions
A leading provider of software platforms for professional services firms
In-depth analysis, commentary and practical information to help you protect your business
LexisNexis Blogs shed light on topics affecting the legal profession and the issues you're facing
Legal professionals trust us to help navigate change. Find out how we help ensure they exceed expectations
Lex Chat is a LexisNexis current affairs podcast sharing insights on topics for the legal profession
Discuss the latest legal developments, ask questions, and share best practice with other LexisPSL subscribers
What happens when a contractor goes bust during the build? William Webb, a barrister at Keating Chambers, examines the legal and practical implications of contractor insolvency.
The legal implications of a main contractor going bust are relatively simple:
Unfortunately, those breach of contract claims may not be worth very much.
There are two or three key structures that can be put in place to protect against contractor insolvency and they are generally standard on most large projects.
One common option is a performance bond so that money can be claimed from a guarantor bank at short notice, often simply on-demand.
A second option is to obtain a parent company guarantee--this is useful where a large contractor is using a regional subsidiary or special purpose vehicle to carry out a project.
A third and very common option is to obtain collateral warranties from as any many different people engaged on a project as possible. This will enable a direct claim to be made against these people in the event of a problem arising. However, these normally don't take effect until conclusion of a project. Thus, they are useful in the event of latent defects, but are of limited use if a main contractor becomes insolvent in the middle of a project.
Unfortunately, none of these options is a magic panacea. There is no way for a developer to completely insulate itself from loss flowing from contractor insolvency which is why the selection of the contractor in the first place is probably the most important step of all.
Free trials are only available to individuals based in the UK
* denotes a required field
**excludes LexisPSL Practice Compliance, Practice Management and Risk and Compliance. To discuss trialling these LexisPSL services please email customer service via our online form. Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason. Trial includes one question to LexisAsk during the length of the trial. See our full terms here.
Access this article and thousands of others like it free by subscribing to our blog.
Read full article
Already a subscriber? Login
0330 161 1234