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Connaught contractors have few options following collapse

Contractors employed by collapsed firm Connaught should look for opportunities to finish the work and review termination and protection clauses within their contracts, construction lawyers have said.

Following news yesterday of the collapse of construction firm Connaught, leading law firm Thomas Eggar’s construction team offered advice to small contractors employed by Connaught in the wake of their administration.

Thomas Eggar associate Frank Bouette said the collapse of Connaught is likely to have widespread ramifications for the construction industry.

“Contractors employed by the company to do the groundwork on outstanding projects may find themselves without fee and fighting to safeguard their own future,” he said.

“Contractors may find themselves without fee and fighting to safeguard their own future.”

Frank Bouette , Thomas Eggar

“What these contractors need to do now is primarily keep their ear to the ground for word on who will be picking up these projects where Connaught has left off in order to put themselves forward to finish the work.

“Simultaneously, they must conduct a review of the termination and protection clauses within their contracts to decide whether to terminate them and do what they can to recover any stock and goods supplied. They might also want to consider taking advice upon the options available to them to protect their own trading positions.”

Thomas Eggar partner Mark Clinton said if contractors have credit insurance, they should also speak to the providers of that insurance about whether or not it will pay out.

“Contractors may want to look at any performance bonds put in place when they entered into the contract with Connaught to determine whether they can call upon those bonds to recover any losses they suffer,” he said.

Readers' comments (1)

  • Sir,
    I want to pick up on the comment attributed to Mark Clinton of Thomas Eggar above because it is technically wrong. A performance bond is issued for the purpose of protecting the Employer in the event of a default by the Contractor in the performance of a scope of works, whereupon the bondsman will pay a percentage of the contract price to the Employer.
    If the Contractor, in this case Connaught, has obtained a parent company guarantee or a bank payment guarantee then the Contractor may recover his contractual losses.
    Kind regards,
    Mark Bull
    Mark Bull Consulting
    Langley House
    Langley Road
    Warwickshire CV35 8PJ

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