What should I do if the contractor is in suspected financial difficulty?
In the event that the contractor is displaying one or more of the above signs, then it is worth considering the following actions to protect the employer’s position as far as possible:
- Closely monitor the financial and on-site performance of the contractor in order to assess the likelihood and timing of potential insolvency
- Ensure all bonds, guarantees and collateral warranties have been obtained under the building contract, and if not take steps to obtain them immediately
- Consider the terms of any guarantees to ensure that the guarantor’s obligations are not inadvertently discharged
- Bonds may require adjudication to have been commenced (or even completed) prior to insolvency so as not to be stayed pursuant to insolvency laws
- Carry out an audit of the on-site plant, equipment and materials, and evidence this (for example with photographs and written records)
- Ensure that copies of all relevant documentation have been obtained, for example drawings, specifications and anything required to comply with CDM requirements. If not, take steps to obtain these
- Review the payment position under the building contract, including whether any over payments have been made to the contractor which should be reclaimed, what retention is held or has been released, whether any payment notices may be necessary, and whether there are rights of set-off which should be exercised
- Check whether the involvement of any third party is required, for example funders, landlords, tenants or purchasers who may have rights in relation to the building contract and how it is administered
- Review the terms of the building contract relating to contractor insolvency – hopefully the parties will be fully aware of the building contract terms and have been administering it correctly to date, but if it has been hiding in a draw then now would be a good time to dust it off and ensure familiarity with the relevant provisions!
In general. there is often a stick or twist decision. If the employer chooses to financially support the contractor (for example by agreeing different payment arrangements), this may help to keep the contractor solvent and more likely to complete the project, but it also exposes the employer to greater risk if the approach is not successful. Conversely, withholding payments from the contractor may make insolvency a self-fulfilling prophecy. The precise advantages and disadvantages of the approach will be dependent on the specific circumstances of each case.
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It is absolutely critical to creating a safe workplace and to making workers feel secure.
This could include floor markings every 2m (as we’ve seen in grocery stores), stopping or limiting/staggering access to communal or common areas such as toilets and kitchens, rearranging workstations to maintain a 2 metre distance or, where this is not possible (for example in manufacturing facilities or production lines), erecting physical barriers and avoiding face to face working, encouraging the use of stairs and discouraging lift-use, designing a one-way system for entry and exit and looking at aircon/heating systems to see if any modifications are possible to prevent the spread of airborne particles. If you can increase ventilation in your workplace, it will help reduce risk.
The government has published detailed social distancing guidance for workplaces across sectors including manufacturing, retail, offices, construction and transport; it has also promised to continue to add to this.
Those who are eligible will be contacted directly by HMRC based on tax returns they have received. If you are eligible you will be asked to fill out an online application. HMRC will pay applicants directly.
Partner at Ward Hadaway Adrian Ballam catches up with corporate finance expert and CBILS specialist Chris Silverwood (CorpFin and cashflow.co.uk) a month after their initial conversation to talk about what the last couple of months have taught us about access to finance.
Sections of the video and their timings are as follows:
(01.06) – example of continuing appetite for certain businesses (e.g. tech sector)
(02.06) – conflict between incumbent bank and different CBILS lenders, plus brief discussion of CBILS II
(05.36) – bounce back loans have been a distraction
(06.27) – muted impact of fintech CBILS lenders
(07.52) – discussion about invoice discounting
(11.59) – looming insolvency environment
(12:52) – emerging themes
Head of Commercial, Colin Hewitt, speaks with the team at NewcastleGateshead Initiative about the complexities of event cancellations and the associated legal implications.
Click here to listen to the full podcast.
Parties are encouraged to review upcoming matters to assess the viability for there to be any agreement which can be reached in relation to the issues in dispute or to consider whether the case needs to proceed to a remote hearing. If directions or issues can be agreed between the parties, reducing the need for remote hearings, then that is the preferred option.