Construction worker

Back

A helping hand for insolvent contractors?

2nd July, 2020

A decision in the Supreme Court has restored the right for companies in liquidation to commence adjudication proceedings. In the case of Bresco Electrical Services Ltd (in liquidation) v Michael J Lonsdale (Electrical) Ltd (2020) UKSC 25 the court allowed Bresco’s appeal against the previous decision that the right of an insolvent company to adjudicate was fettered on two main grounds:

That there was an incompatibility between the adjudication process and the Insolvency Rules that meant an adjudicator lacked the jurisdiction to hear the dispute; and
Any adjudication bought by an insolvent company would, in any event, be futile as a favourable decision in their favour, was unlikely to be enforced.

However those arguments have now been dismissed, meaning that, once again, insolvent companies can refer disputes to adjudication in an attempt to recover sums due under construction contracts. Given the current circumstances, and the impact COVID-19 is having on the construction industry, this is going to be welcome news to insolvency practitioners.

However it should be remembered that the dismissal of the “futility argument” simply means the bar to commencing an adjudication has been removed, there is still a chance a successful award will not be subsequently enforced. Is it probable therefore, that insolvent claimants, or those acting on their behalf, will look to provide some form of security to minimise this risk.

From the Employer’s point of view, this decision further highlights the need to ensure that they are familiar with the insolvency provisions in their contracts as they can no longer rely on the Bresco to save them should a dispute arise.

Related Case Studies

Howes Percival Will and Testament

Defending a claim under the Inheritance (Provision for Family and Dependants) Act 1975

A leading member of the team was instructed by brothers who wished to defend a claim brought by their…

Howes Percival Countryside

Giving effect to promises – still a knotty problem for the Courts: The Supreme Court decision in Guest v Guest

The recently decided case of Guest v Guest shows the complexity of claims based on promises and how…

Howes Percival Will and Testament

Replacing an Executor

If an Executor does not advance the administration of an Estate they can be replaced – either by agreement…

Get in touch

To contact us, please fill out this form and we will get back in touch as soon as possible. Your personal data will be processed in accordance with our privacy policy which can be found here.

Please note that our offices will be closed from 1.00pm on Tuesday 24 December 2024 until 9.00am on Thursday 2 January 2025 or the holiday season.

Thank you for your enquiry. We will respond as soon as possible.

First Name

Last Name

Phone Number

Location

Email Address

Service Required

Message