Brabners Building Links event explores legal risks of insolvency as supply chain pressures rise

Our Building Links event returned to our Lancashire office in April, gathering business owners and leaders from across the North’s construction and development industry to discuss the growing supply chain pressures driven by macroeconomic factors — pressures that are likely to result in rising insolvencies and financial difficulties.

Against a backdrop of tightening margins, rising costs and ongoing economic uncertainty, the session explored how financial distress is likely to impact the construction industry in the years ahead — and why early, strategic legal advice will be critical.

The growing insolvency risk in construction

The event opened with an overview of key legal concepts of insolvency from Craig Arrowsmith, Partner in our litigation team.

Building on this, Jennifer Lockhart, Partner in our insolvency and restructuring team, highlighted the dangers of phoenixing and why the construction sector is vulnerable.

Phoenixing is the practice of liquidating a company with the intention of avoiding obligations to creditors and then continuing the same or a similar business through a new or related company (Newco).

Typically, this involves transferring any valuable assets into Newco (often for less than market value) and exploiting its goodwill and business opportunities. Meanwhile, the creditors of the old company are left to prove their debts against a valueless shell. The phoenix company rises out of the ashes of the defunct company, leaving behind the old company’s liabilities.

Jennifer said: “Phoenixing can cause real harm, especially in the construction industry with its often layered structure.

When a director repeatedly leaves behind unpaid labour, unpaid suppliers and unfinished works only to reappear the following week under a new logo or similar name, it's not just extremely galling — it's when the industry suffers most financially and reputationally.”

Real-world impact: lessons from ISG’s administration

Rob Turner, Partner in our insolvency and restructuring team, provided an update on UK multinational construction services company ISG Group’s ongoing administration, which began in 2024. 

This involved the key reasons for ISG’s collapse — including legacy contract issues and a number of projects not progressing sufficiently — and sums recovered to date as an example of the financial impact of the insolvency of a tier one contractor on the wider industry.

Why the sector is under pressure

The speakers were joined by Barry Goodall, Partner and Head of Construction, for an in-depth panel chaired by Building Links organiser, Partner Jennie Jones.

The panellists discussed the reasons that the construction industry is prone to financial difficulty and insolvency, such as long supply chains and tight margins — particularly among tier one contractors.

Despite the industry’s most recent insolvency figures remaining similar to last year, the experts agreed that financial difficulties that were beginning to be felt due to rising costs would likely lead to growing insolvencies in the coming years.

Jennie said: “There are huge opportunities for the construction sector in Lancashire and across the North West, with the government’s target to build 1.5m new homes and significant infrastructure and cultural regeneration projects across the region. However, this event highlighted the expected growth in supply chain pressures and how this will increase risks for all firms. 

Our Building Links community is continuing to grow by providing leaders in the construction and property industry with timely insights which will guide key future business decisions, alongside a unique opportunity to network with senior peers. 

We’ve already had some brilliant feedback from attendees to this event and are currently finalising a brilliant lineup of events for the remainder of 2026 and into next year.”

Want to know more? Join the Building Links network

Building Links is a networking group for construction and property professionals. Each quarter, we bring together leading voices to discuss and demystify the key issues that affect the industry — providing members with essential guidance on how to navigate challenges and capitalise on opportunities. 

These exclusive, invite-only events focus on education, collaboration and sharing best practice. They also present a great opportunity to network with peers in a welcoming and friendly environment. 

Find out more and join the network.