Contractor Insolvency: Managing Risk and Responding Quickly in Construction
Written by Anderson Brookes | June 2025
Contractor insolvency is one of the most disruptive and expensive risks in construction today. Whether it’s a main contractor folding or a key subcontractor walking off site, the financial and operational impact can be enormous – delaying work, blocking payments, and threatening entire projects.
At Anderson Brookes, we help construction directors, subcontractors, and supply chain businesses respond quickly. Whether that means tackling company debt, understanding insolvency options, or placing a business into liquidation, we offer confidential, fast support from a licensed Insolvency Practitioner.
Free Consultation – advice@andersonbrookes.co.uk or call on 0800 1804 933 our freephone number (including from mobiles).
The Rise in Contractor and Construction Insolvencies
Construction continues to record more insolvencies than any other UK sector. Contractors operating on tight margins, especially those tied into fixed-price contracts are struggling with cash flow, rising material costs, and payment delays. The knock-on effect through the supply chain is severe, especially when HMRC pressure or unpaid VAT tips firms into formal action.
If you’re unsure whether your business can continue trading, our limited company debt solutions page offers practical options and early-stage advice.
For those already facing liquidation, you can find a clear, plain-English guide to the cost of a Creditors’ Voluntary Liquidation (CVL) here.
Contractor Insolvency Voluntary Liquidation Process – Example
Recognising the Early Signs Before It’s Too Late
Worried that a contractor or subcontractor might be in trouble? There are often clear signals. Repeated payment delays, erratic communication, last-minute changes to work plans, or supplier disputes can all indicate deeper financial issues.
We’ve also published a detailed breakdown of early warning signs of construction insolvency, especially relevant for subcontractors trying to protect their business from upstream failures.
Being able to spot these signs early can help you act before a collapse – protecting your position and improving the chance of recovering what you’re owed.
How Contractor Insolvency Affects the Whole Project
When a contractor goes under, the ripple effect is often immediate. Subcontractors and suppliers are left unpaid, sites are paused or shut down, and clients may have to re-tender the remaining work, often at a higher cost.
Construction insolvency is rarely a neat event. Directors are left dealing with HMRC debt, legal pressure, and disputes with creditors. Subcontractors face delayed work, missing payments, and broken supply chains.
We support business owners through this with step-by-step guidance – whether that’s placing a company into voluntary liquidation, managing debts, or finding a structured route out.
Steps to Take If You’re a Contractor at Risk
If you’re a construction director under pressure, acting early is key. These are some of the first steps we advise:
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Review your current and future cash flow
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Speak to creditors and open lines of communication
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Prioritise payments and reduce non-essential costs
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Seek advice from a licensed Insolvency Practitioner
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Explore formal and informal company debt options before HMRC or suppliers take action
We often help directors who’ve missed a VAT bill or received a winding-up petition. If that’s you, here’s what to do if you can’t pay your VAT.
Protecting Yourself From Contractor Insolvency
If you’re a subcontractor or client worried about the stability of a contractor you’re working with, you’re not alone. Many companies are doing more due diligence than ever.
We recommend:
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Reviewing payment history and credit reports
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Using project bank accounts or milestone payments
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Including clear insolvency clauses in contracts
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Avoiding advance payments without security
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Building a diverse pipeline of clients and projects
If you’re unsure how exposed your business is, or if you want to understand what options you have, get in touch with our team for free advice.
Free Consultation – advice@andersonbrookes.co.uk or call on 0800 1804 933 our freephone number (including from mobiles).
Fast Support, Practical Advice
At Anderson Brookes, we help construction companies take action early – reducing stress, limiting losses, and improving outcomes. Whether your business is facing mounting debt, late payments, or court threats, we’re here to help.
We’re a licensed firm offering practical, friendly insolvency support to contractors, subcontractors, and related trades. We understand how quickly things can spiral.
Free Consultation
📧 advice@andersonbrookes.co.uk
📞 0800 1804 933 (freephone, including mobiles)
📍 Or use our Contact Us form
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