Typical situations
- The order book is real, but historic unsecured debt and HMRC arrears cannot be cleared from current applications.
- An informal payment plan has failed because too many trade creditors and HMRC are involved.
- Directors want to keep the company and its accreditations rather than enter administration.
- Employer or framework terms may treat insolvency events as a ground for termination.
A construction CVA has to survive the contract terms
The legal mechanics of a CVA are the same as for other UK companies: a proposal to unsecured creditors, supervised by a licensed insolvency practitioner, which can compromise historic unsecured debt if it is approved.
The construction question is whether the business can still deliver work afterwards. Some contracts, frameworks and bond facilities treat an insolvency event as a default. That risk needs to be understood before a CVA is treated as the preferred route.
Bonds, retentions and work in progress
Performance bonds, retention bonds and parent company guarantees can all be affected by a formal process. So can the recoverability of retentions and uncertified work.
A proposal that looks acceptable on a creditor list can still fail commercially if it causes the loss of the contracts that were supposed to fund it. That is the difference between this page and the general CVA overview.
Compare the formal options in construction terms
If a CVA would trigger termination or the loss of bonding, administration or another restructuring route may need to be considered. If there is no viable contracting business left, closure options may be cleaner.
Turnwell helps construction directors test those points before a process is chosen, alongside cash flow and HMRC issues that often sit underneath the debt figure.
Common questions
Will clients continue to award work during a CVA?
Some will, some will not. It depends on the employer, the framework, the size of the remaining works and how the proposal is explained. That uncertainty should be built into the viability assessment.
Why is there a separate construction CVA page?
Because bonds, retentions and termination clauses can make a CVA unworkable even where the creditor numbers look acceptable. The general CVA page explains the process. This page deals with those construction constraints.
Related services
Construction creditor pressure
Respond to supplier action, main contractor insolvency and enforcement without losing sight of live contracts.
Construction HMRC debt
Address CIS, VAT, PAYE and Time to Pay issues that are specific to contractors and subcontractors.
Personal guarantees
Map personal guarantees, plant finance and director duties in a contracting business under pressure.
Related insights
Construction cash flow, late payment and retentions
How late certificates, pay-less notices and retentions create cash pressure in construction businesses, and what directors should examine first.
Director duties when a company is in financial difficulty
A clear explanation of how UK director duties shift as a company approaches insolvency, including creditor interests, continued trading and record-keeping.
