Construction insolvency—how to spot problems and how to protect yourself—sub-contractors
Produced in partnership with CMS
Construction insolvency—how to spot problems and how to protect yourself—sub-contractors

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—sub-contractors
  • Spotting the early symptoms of contractor insolvency
  • Sub-contractor methods of protecting itself in advance
  • Sub-contractor methods of contractual protection

This Practice Note is intended to provide advice to sub-contractors on how to spot problems with insolvent contractors and how the sub-contractor can take steps to protect itself in advance. In the event that the main contractor has become insolvent, see Checklist: Sub-contractor steps to take if contractor becomes insolvent—checklist.

Spotting the early symptoms of contractor insolvency

  1. most importantly, sub-contractors need to keep alert to the contractor's financial status

  2. the sub-contractor 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 other 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

Sub-contractor methods of protecting itself in advance

There are various ways in which a sub-contractor can protect itself in advance against the risk of