In the second of our mini-series on insolvency in construction, we consider what you need to do when you find out that the party you are in contract with has become (or is about to become) insolvent.

Who are you in contract with? Which specific entity?

The first thing you should do in the event of a counterparty's alleged insolvency is check which legal entity you are in a contract with.

This is in order to prevent you from acting too early and committing a repudiatory breach yourself, if you take pre-emptive action against your counterparty.

Insolvency is high on the agenda in the construction industry.

In the first of this mini series, we take a look at the meaning of insolvency and summarise the main insolvency processes that can typically affect parties involved in construction projects. The series will also address contract issues and minimising risk, so keep an eye out for our future articles on this topic.

In Re Willis, Eileen Willis (Anne) applied to annul a bankruptcy order made against her on the application of her former husband, Leslie Willis.

The liquidators of Wenztro Co-operation Limited (Wenztro) appealed against the High Court's decision not to order Wenztro's former director, Mr Ellis, to produce and be examined on personal financial information including tax return and bank statements. The liquidators sought to assess Mr Ellis' judgment worthiness for the legal proceedings they had commenced against him for breaches of directors' duties.

We previously reported on the Court of Appeal decision in Trends Publishing International Ltd v Advicewise People Ltd & Ors. The case concerned a compromise under Part 14 of the Companies Act 1993 that was set aside by the High Court on the basis that the challenging creditors, who had voted against the compromise, had been unfairly prejudiced by the decision to call only one meeting of creditors.

Jollands v Gull concerns an application by the liquidators of a company to set aside insolvent transactions. The transactions involved funds from the sale of the company's business being paid, via the company's accountant, to three minority shareholders, which then transferred their shares to the respondent shareholders (or in one case, a respondent shareholder's family trust). The respondents' current accounts were in credit at the time.

Another recent judgment in the Walker litigation concerns the validity of a litigation funding arrangement from SPF No. 10 Ltd (SPF). That arrangement is being used to fund proceedings that the liquidators of Property Ventures Ltd (in liquidation) (PVL) have brought against PwC and the directors of PVL. See our previous update on the related litigation.

A recent decision from the High Court in the Walker v Forbes litigation also reaffirms the Court’s protection of a defendant’s personal financial information. The plaintiff, Mr Walker, the liquidator of Property Ventures Ltd, sought discovery of the insurance policy of one of the defendants, Mr Hansen, in an attempt to determine the amount of insurance cover that Mr Hansen might have to meet the liquidator's claim against him.

The decision of the English High Court in Willmont and Finch v Shlosberg clarifies how insolvency practitioners can use and disclose documents obtained under compulsion or litigation to related insolvency estates.

Ms P was on her way to bankruptcy. Mr W, a friend and adviser, helped her to gift funds from an inheritance to a family trust. Mr W moved the funds around his own accounts (including his family trust account and business accounts). Ms P was then adjudicated bankrupt.