Abstract:
Construction contracts commonly provide that a contractor’s insolvency or the commencement of restructuring proceedings in respect of the contractor may give rise to the employer’s entitlement to exercise certain rights under the contract, including the right to terminate the contractor’s employment. Most construction contracts also require the contractor to furnish an on-demand performance bond, which the employer can call on without proof of default. This arguably allows the employer to call on the on-demand performance bond in the event that the contractor is undergoing restructuring proceedings or is insolvent at the material time. This article explores the impact of s 440 of the Insolvency, Restructuring and Dissolution Act 2018 (“IRDA”) in respect of the aforementioned scenarios, and discusses some practical tips which can be considered to navigate s 440 of the IRDA.