Welcome to the latest edition of our Insolvency Bulletin, focusing on the construction sector.
As practitioners will know, Insolvency in the construction industry is common, never more so than in a depressed or struggling economy given the continual focus on profit margins and overheads, lending capacities and requirements and the onward impact on the housing market. With this in mind, it will come as no surprise that businesses operating in the construction industry accounted for 16.6% of all insolvencies in England and Wales in January 2024 whereas, in 2023, construction firms accounted for 13.8% of all registered businesses in the UK – the industry has been disproportionately affected. In the year to January 2024, the total number of businesses operating in the construction industry becoming insolvent was thought to be 4,383, a 36.2% increase on the 2019 figures (see BCIS report here). 2023 saw some notable construction insolvencies, and the ripples caused by those and many others, are still being felt in the sector.
With the rise in inflation (though dampening) meaning materials costs increasing; higher interest rates reducing the ability to access cheap debt; an increasing lack of suitably qualified construction professionals; increased scrutiny of the industry's ESG credentials; and a cooling housing market, 2024 looks unlikely to represent an improvement in the outlook for the struggling UK construction industry. As pressure on the industry continues, it seems possible that the number of insolvencies will yet further increase, meaning insolvency practitioners can expect further work in the sector.
This newsletter, prepared in conjunction with the experienced Construction Disputes team at Trowers & Hamlins, covers:
- Construction insolvency – how, when and where?
- What happens next – managing a project post-insolvency
- Payment entitlements
- Guide to construction adjudication
- A review of the recent decision in CLS Civil Engineering Ltd v WJG Evans and Sons [2024] EWHC 194 (TCC) concerning which documents are the relevant contractual documents
- Practical tips for a successful 'smash and grab'
- Our guide to the sector including some common and less common protections to consider in construction projects
Our Construction Disputes team is able to advise on any issues arising from construction projects. Please feel free to get in touch.
If you have any suggestions or requests for future editions of the Trowers Insolvency Bulletin, please get in touch with one of the team.
Click the links below to view our latest insights and news:
- Construction insolvency – how, when and where?
- So, what is next for the project?
- Payment entitlement and recovery post insolvency
- Construction Insolvency – Basic Guide to Adjudication
- CLS Civil Engineering Ltd v WJG Evans and Sons [2024] EWHC 194 (TCC)
- Making a valid application for payment: requirements and practical tips
- Protecting against construction insolvency
