The threat of contractor insolvency could be a driver for change in the way construction firms operate.

As inflation rises, the chance of contractor insolvency increases. Rising materials prices and increasing labour costs, combined with supply chain issues, mean that already thin margins become even slighter, increasing the risk that a contractor might cease trading. A focus on lowest price tenders is also exacerbating the situation.

The challenges faced by the construction industry are continuing to grow and insiders wonder when the storm is going to hit. For some, like Probuild, it already has. Rising inflation and the increasing cost of debt, labour shortages, supply chain delays and escalating cost of freight and materials are putting the industry under enormous pressure. Simultaneously Governments have invested heavily in building and construction to maintain growth in the economy.

Update unseres Leitfadens zum Umgang mit Materialkostenerhöhungen und Lieferverzögerungen

Die aktuelle Entwicklung bei Baukosten und Materiallieferungen

The Court of Appeal has confirmed that although insolvent parties may refer disputes to adjudication, they will have difficulty enforcing adjudication decisions in all but exceptional circumstances

In a recent decision,¹ the United States Bankruptcy Appellate Panel of the 9th Circuit clarified an important step that construction lienholders must take to perfect their liens when the debtor has filed a bankruptcy petition before the lienholder files a foreclosure lawsuit.

In brief - The collapse of national construction company ProBuild sent shockwaves through the industry with flow-on effects felt by many stakeholders. What role can early risk identification and mitigation play in saving a company from entering administration?

When a principal contractor or senior builder enters administration, there are a significant number of risks which, if navigated property, can be mitigated to minimise loss.

Good evening.

Following are our summaries of the civil decisions of the Court of Appeal for Ontario for the week of March 7, 2022.

In Ernst & Young Inc. v. Aquino, the court upheld the application judge’s decision to grant the orders the Bondfield monitor and trustee in bankruptcy requiring payments made at undervalue to be repaid.  In coming to its decision, the Court applied the corporate attribution doctrine.

In the construction sector solid cash flow throughout the supply chain is the lifeblood of most projects, no matter what size, and is arguably the single most important factor in ensuring that a project reaches its conclusion. However, the cumulative effect of various other factors such as Brexit, escalating global energy prices, the outlawing from 1 April 2022 of the use of the red diesel usage for construction plant, super inflation, higher material and labour costs and the end of government COVID-19 support schemes has led to increased lending costs and smaller profit margins.

Despite calls upon the government to intervene and, later, attempts to sell the business, the South West construction firm Midas has collapsed into administration this week.

The collapse of the business has led to over 300 redundancies, though it is understood that a section of the business (Mi-Space) has been sold, saving over 50 jobs. Concerns have also been raised about the knock-on effort on sub-contractors and connected businesses, many of whom have been left out of pocket through unfulfilled contracts and unpaid invoices.

Industry insolvencies are expected to increase in the construction industry in 2022. I will discuss in this article how Project Trusts will impact affected parties.

The legislation giving effect to Trusts, the Building Industry Fairness (Security of Payment) Act 2017(BIFA), was initially based on the establishment of ‘Project Bank Accounts’ (PBAs).