Construction insolvency—how to spot problems and how to protect yourself—employers
Produced in partnership with CMS
Construction insolvency—how to spot problems and how to protect yourself—employers

The following Construction guidance note Produced in partnership with CMS provides comprehensive and up to date legal information covering:

  • Construction insolvency—how to spot problems and how to protect yourself—employers
  • Spotting the early symptoms of contractor insolvency
  • Employer methods of protecting itself in advance
  • Security package

This Practice Note is intended to provide advice to employers on how to spot problems with insolvent contractors and how the employer can take steps to protect itself in advance. For details on the steps to take in the event the contractor has become insolvent see: Employer steps to take if contractor becomes insolvent—checklist.

Spotting the early symptoms of contractor insolvency

  1. most importantly an employer needs to keep alert to the contractor's financial status

  2. the employer should take heed of ongoing rumours about the contractor's financial position (either in the press or by word of mouth)

  3. look out for official announcements to shareholders/the stock market (for example, profit warnings)

  4. keep aware of non-payment or late payment of sub-contractors by the contractor

  5. note any late or partial commitment to key supply contracts by the contractor

  6. be aware of any redundancies or inexplicable removal of personnel from the project by the contractor

  7. removal of materials or plant from the site

  8. any reduced resourcing by the contractor on site

  9. note any constant delays to programme without any adequate explanation

  10. confirm suspicions by carrying out a Dun & Bradstreet search/report, which should disclose, for example, any unsatisfied court judgments against the contractor

Employer methods of protecting itself in advance

There are various ways in which an employer can protect itself in advance