Guide to insolvency in the construction industry
Produced in partnership with Gurbinder Grewal, Ian Fox and Michael Wright of Dentons UK and Middle East LLP
Guide to insolvency in the construction industry

The following Restructuring & Insolvency guidance note Produced in partnership with Gurbinder Grewal, Ian Fox and Michael Wright of Dentons UK and Middle East LLP provides comprehensive and up to date legal information covering:

  • Guide to insolvency in the construction industry
  • Introduction to the construction industry and construction procurement
  • Procurement methods
  • Documentation
  • Timeline of a construction project
  • Dealing with an insolvent company in the construction industry
  • Contractual protections to look out for
  • Cashflow
  • The contractual right to terminate
  • An insolvent contractor
  • more

This Practice Note considers common issues that may arise out of insolvency in the construction industry. It considers the effect and relevance of adjudication as a recovery method where insolvency may be imminent, and contains some practical tips on steps that can be taken in the event of an employer insolvency.

This Practice Note contains general tips and advice and, as such, will not be applicable to every insolvency situation experienced in a construction context. This Practice Note should be considered carefully alongside the relevant facts of each case.

Introduction to the construction industry and construction procurement

The UK's construction industry is considered a valuable indicator as to the overall health of the UK economy. For instance, an increase in demand in the construction sector is usually fuelled by growth in other industries and their desire/need to expand. The UK's construction industry is also a significant contributor to the UK economy in its own right. In 2017, the construction industry's output was £113bn (6% of the total economy) and employed 2.4m people in Q3 2018 (6.8% of the total jobs available in the UK).

The construction industry is composed of private and public sector work. In 2017, private-sector work represented approximately 76% of the total construction industry spend, and is split into three main areas:

  1. repairs and maintenance (34%)

  2. residential (25%); and