Not the best of news last week for the UK construction market. More and more companies are apparently in “significant financial distress” according to Begbies’ Red Flag Report.
Given that it’s more important than ever to protect yourselves from supply chain / upstream insolvency, I do wonder whether it’s time for the private sector to properly embrace Project Bank Accounts (PBAs)? They’re very common in the public sector on large projects. The usual reasons not to use these in the private sector – admin time and costs / initial setting up costs or even just a lack of knowledge – don’t really justify parties not seeking to alleviate the risk of not getting paid in my opinion.
We’ve got plenty of experience at CW in helping clients set up and operate PBAs, including drafting and negotiating the relevant trust deeds, bank mandates and necessary amendments to the underlying construction contracts.
Please do let us have your thoughts and get in touch if you’d like to discuss PBAs or your wider risk position on projects.
The insolvency specialist’s latest Red Flag report notes that 102,285 construction businesses faced “significant” distress at the end of the second quarter (Q2) this year, compared with 89,824 in the equivalent period last year.