If your contractor becomes insolvent (clients)
- Standard forms usually let the employer terminate on the contractor’s insolvency, and often suspend payment obligations until the final account. Section 233B of the Insolvency Act 1986 doesn’t stop a client terminating an insolvent contractor.
- Secure the site, materials and design documents; check bonds, guarantees and warranties.
- Get a new contractor to finish, and keep records of the extra cost, which may be set off against sums otherwise due.
If your client or main contractor becomes insolvent (suppliers)
- Section 233B, added in 2020, generally stops a supplier (including a contractor or subcontractor) from terminating, or doing anything else, because its customer has entered an insolvency procedure. You may have to keep working, though the officeholder must pay for supplies after the insolvency.
- “Pay when paid” clauses are generally banned, but the Construction Act allows them where a party further up the chain is insolvent.
- Unprotected retention is usually lost into the insolvency, one reason for the proposed retention ban.
- You’ll normally prove in the insolvency as an unsecured creditor for sums due before it.
Adjudication and insolvency
A company in liquidation can refer a dispute to adjudication (Bresco v Lonsdale [2020]), but enforcement may be refused where cross-claims and insolvency set-off make it unfair. Take specialist advice early.
General information, not legal advice. What applies to you depends on your contract, the facts and where the work is, and the law changes. Check the sources below and take advice from a qualified professional before acting on anything that matters.
Last updated: 28 September 2026
