Insolvency and Liquidation in the UK Construction Industry: Challenges and Solutions

 Insolvency and Liquidation in the UK Construction Industry: Challenges and Solutions

There are a lot of businesses in multiple markets that find themselves going insolvent and as such having to go into liquidation. The construction industry is amongst them and is particularly vulnerable to insolvency for various reasons. These include the fact that construction projects are usually complicated and there needs to be a lot of different stakeholders involved in the project for it to work. If during the process one party becomes insolvent then this can have a ripple effect on the rest of the project as well. It can also lead to subsequent delays, cost overruns, and in worst-case scenarios, the project’s collapse as a whole.

The term ‘insolvency’ means that a company is no longer in a position where it can pay off its debts when they fall due (either because of cash or because of the value displayed on its balance sheet) the value of the company’s liabilities total more than its overall assets. Once a company is insolvent, it may be placed into liquidation, the aim of which is to try and recover all of the company’s assets so that they can be sold and then the proceeds are passed on to the necessary creditors who are owed funds. The liquidation process can be a complex one, which is why a professional liquidator is necessary, you should be sure to look for one which has both the interests of your creditors and your company in mind.

In 2018 one of the economic sectors which were hit the hardest was the construction sector as insolvencies represented 17% of them in total (3001 out of a total of 17,454). This upward trajectory continued into 2019 with figures suggesting insolvencies of 18.6% (3198 out of a total of 17,197).

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