Helping you recover the debts of insolvent construction companies

Helping you recover the debts of insolvent construction companies

In a highly anticipated ruling, the Supreme Court has announced that adjudication can now be used by insolvency practitioners as a way of recovering debts owed to insolvent construction companies.

Here we look at what adjudication is, what this ruling means for insolvency practitioners, and how it could help improve recovery rates in a sector where it is notoriously difficult to recover debts and maximise funds available for creditors of insolvent companies.

What is adjudication?

In simple terms, it is a fast-paced and efficient form of dispute resolution, with the process generally taking just 28 days from start to finish to secure an adjudicator's decision.

In comparison to more traditional dispute resolution routes such as court proceedings or arbitration that can take a significant amount of time and resources to conclude, adjudication is a far more time and cost effective approach.

What does the Supreme Court ruling say?

Over the past two years, there has been lots of debate about whether adjudication is a viable option for insolvency practitioners seeking to recover debts owed to insolvent construction companies. This was due to potential conflicts between the adjudication process and insolvency rules.

However, this Supreme Court ruling has decided that the adjudication and the insolvency regimes are not incompatible, and that adjudication is a viable option for dispute resolution in these circumstances. In fact, the Court recognised that an adjudicator's decision can actually be really useful to a liquidator in carrying out the insolvency set-off process - in stark contrast to previous perceived conflicts.

Read more about the ruling here.

This means that the door is now open for insolvency practitioners to use adjudication to resolve disputes on behalf of insolvent construction companies.

How can adjudication help insolvency practitioners?

In the past, insolvency practitioners have had limited and often very expensive options for dispute resolution when recovering debts owed to insolvent construction companies. In addition, the industry has always carried a high number of casualties - a trend likely to be temporarily worsened as a result of the Covid-19 pandemic, with rising costs and supply chain delays impacting on projects and cash flows.

Adjudication now provides a quicker and much more cost effective route for insolvency practitioners to recover debts. This is a crucial lifeline to help maximise the funds available for creditors of liquidated construction companies.

How can we help?
Ahead of starting an adjudication, it’s important you get advice from experienced specialists who understand every step of the process, to ensure you get the best possible outcome.

Our team of experts are here to help, offering you a fixed fee consultation session to explore your case and assess whether adjudication is the right way forward for you.

Fill out our enquiry form to set up an initial call.