Can I take an insolvent main contractor to adjudication?
Rarely: you usually need the office-holder's consent or the court's permission, and even a win only fixes the size of an unsecured debt.
Updated: . By Jack Butler-Kettle, Construction Claims Consultant.
The answer
The office-holder is the administrator or liquidator running the company. In an administration, a moratorium applies. It is a legal freeze that stops legal process against the company without the administrator's consent or the court's permission, and adjudication counts as legal process. In a liquidation, the position depends on the type of liquidation, and permission may still be needed. Even where an adjudication can go ahead, the decision does not get you paid. It fixes a figure, which then has the main contractor's cross-claims deducted and is paid, if at all, as a dividend. So the account is usually better settled through your claim in the process. Negotiate it with the office-holder, backed by the same evidence an adjudicator would want. It can also work the other way. The courts have confirmed that a company in liquidation can itself start an adjudication. So an office-holder pursuing a claim against you, for defects or completion costs, may do so, and you should be ready to answer it.
Example
Illustrative example. The scenario and figures are invented.
The facts
A cladding subcontractor has a £62,000 final account in dispute, with an adjudication being prepared, when its main contractor enters administration.
What happens
- The administrator refuses consent to the adjudication, and the solicitor advises that the court's permission would be costly and uncertain.
- The account is lodged with the claim instead, built item by item with the evidence the adjudication bundle would have carried.
- The administrator's quantity surveyor sets £8,000 of back-charges against it. The subcontractor concedes £3,000 of measurement on two elevations.
The account in figures
| Item | Amount |
|---|---|
| Final account claimed | £62,000 |
| Measurement conceded | £3,000 |
| Back-charges netted | £8,000 |
| Agreed claim in the administration | £51,000 |
The outcome
The claim is agreed at £51,000 without an adjudication. The evidence prepared for the adjudicator did the same work at a fraction of the cost.
Building the account and negotiating it with the office-holder is our Insolvency Claim service.