The current recession will inevitably lead to more insolvencies in the construction industry. Parliament, and to some extent the courts, seem to be doing as much as possible to soften the blow. However, sometimes it is the party facing a claim from an insolvent company that needs the help.

Relief for companies in trouble has come in the form of the Corporate Insolvency and Governance Act 2020 (Lindy Patterson QC commented on the bill on these pages on 15 June). The act allows eligible companies to claim protection from creditors, via a moratorium lasting 20 working days (initially) simply by filing documents with the court. It also contains a provision that helps “clients” – in a construction context, employers, but also main contractors as against their subcontractors – that have gone insolvent. A “supplier” (eg the main contractor) cannot now terminate a contract or “do any other thing” because of a breach that occurred prior to the start of the formal insolvency.

The bar on doing “any other thing” seems to stop the supplier from even suspending work. Does that override the statutory right to suspend for non-payment in section 112 of the Construction Act? The legal position, where there are these two apparently conflicting statutes, is unclear.

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