On 29 April 2015 The Insolvency Service of the UK Government published updated insolvency statistics which include a breakdown of insolvencies that occurred in 2014 across various industry sectors including the construction industry. There are separate tables of statistics for England and Wales and for Scotland.
The construction industry statistics are subdivided into three main areas of construction industry activity being (1) construction of buildings, (2) civil engineering, and (3) specialised construction activities. These three categories are then subdivided further providing more detail on the types of activites being undertaken by the insolvent companies.
Scotland
The tables containing the Scottish industry statistics show a total of 649 compulsory liquidations in Scotland in 2014 across the industry groups with 152 of those being in the construction industry. The Scottish construction industry therefore having 23% of the reported compulsory liquidations, the equivalent of 3 per week and the highest incident of compulsory liquidations across all the industry groups.
England and Wales
The tables containing the industry statistics for England and Wales show a total of 3751 compulsory liquidations in England and Wales in 2014 across the industry groups with 578 of those being in the construction industry. The construction industry in England and Wales therefore having 15% of the reported compulsory liquidations, the equivalent of 11 per week and the highest incident of compulsory liquidations across the identified industry groups.
Implications
These statistics demonstrate that compulsory liquidations are relatively high in the construction industry both in Scotland and in England and Wales. High profile insolvencies in 2015 impacting on Scottish projects have included Muirfield Contracts and Anglo Holt.
This raises a range of questions for those operating in and working with the construction industry including why do insolvencies happen in the construction industry? What can you do to mitigate the risks and optimise your position should you be impacted by a construction insolvency? What does the insolvency practitioner do and why?
Market insight
These are just some of the questions that we will be considering at our upcoming breakfast seminars:
Upstream/Downstream Construction Insolvencies: Mitigating Risk and Optimising Outcomes
Disclaimer
The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.
